October 26, 2010

BNY Mellon Survey: More Firms Are Meeting With Hedge Funds, Sovereign Wealth Funds

China and Hong Kong are attracting secondary stock listings by global companies

Companies worldwide are adapting their investor relations strategies to enhance their outreach to hedge funds and sovereign wealth funds, BNY Mellon said Monday in announcing the results of an annual survey it had conducted. The study,Global Trends in Investor Relations, reports that 22% of respondents are contemplating a secondary stock listing to attract investors in high growth markets.

The survey, developed as a benchmarking tool for BNY Mellon's depositary receipt clients, looks at how publicly traded companies are managing their investor relations (IR) practices—from guidance and disclosure policies to sell-side approaches and growing interest in social media tools

"We're seeing companies truly act more globally to raise their IR profile, from the time spent with hedge funds and sovereign wealth funds (SWFs) to the burgeoning use of secondary listings that target regional high growth markets," Michael Cole-Fontayn, chief executive officer of BNY Mellon's Depositary Receipts business, said in the statement. "IR officers are making a commitment to give fair and equal access to all investors, no matter who or where they are, to make sure they have the best information about their company."

Key findings of the survey include:

  • 93% of all companies meet with hedge funds, versus 89% in 2009; 24% of a firm's investor meetings are with hedge funds, up from 16% in 2009. Among the reasons some firms do not meet with hedge funds are lack of information on a fund's strategy and shorting risk.
  • 47% of all companies meet withSWFs and an additional 23% are considering doing so. Western European companies are the most likely to meet (56%) or consider meeting (44%) with these entities. North American firms are least likely to engage SWFs; more than half have no plans to do so.
  • 22% of companies are considering a secondary listing in an emerging market,outside their home market. Among these firms, 70% identified a listing in China or Hong Kong as of strategic interest.
  • Social responsibility reportingis most common in Western Europe (77% of companies issue Socially Responsible Investing/Corporate Social Responsibility reports) and Latin America (72%), in contrast to firms in Asia-Pacific (36%) and North America (29%).
  • Only 9% of companies usesocial media to communicate with investors, but 35% are looking for more information on its potential uses. Of those that do use social media, Twitter is the preferred medium, followed by corporate blogs.
  • 82% of companies providefinancial guidance, especially those in Western Europe (89%) and North America (86%). Seventy percent of firms in the BRIC countries (Brazil, Russia, India and China) offer such guidance, compared with 82% of companies in non-BRIC emerging markets.
  • The major regions of focusfor growth of investor opportunities over the next three years are North America (77%) and Europe (70%), followed by Asia (48%).

The BNY Mellon announcement said the new IR study was the sixth by its Depositary Receipts team. The survey, conducted during July and August, features input from nearly 400 companies across 47 countries. Respondents run the gamut of market cap, region and industry, including financials, technology, industrials, consumer staples and energy.

BNY Mellon acts as depositary for more than 2,100 American and global depositary receipt programs, acting in partnership with leading companies from 67 countries. BNY Mellon is a global financial services company that operates in 36 countries and serves more than 100 markets. It has some $24 trillion in assets under custody and administration and more than $1 trillion in assets under management, services $12 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corp.

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