Invest in investors
The ‘Post’ speaks with Bank Hapoalim’s investor relations manager
In July, a modest event took place in the history of the local economy, when the Israeli Investor Relations Forum of the Association of Publicly Traded Companies held its first meeting. Among the participants were 35 investor relations (IR) department managers from leading companies. They took part in the meeting out of a real need to unite and raise the importance of their field and to contribute to the business growth of companies, economic bodies and essentially the entire country.
Bank Hapoalim also took part in setting up the forum and organizing its first meeting, as befits an economic entity that has been operating its own investor relations department for more than 15 years. The director of the department over the past year, Karen Mazor, has also been selected as a member of the forum’s professional advisory committee. For Mazor – who began her professional career as Partner’s first investor relations manager and later worked for various hi-tech companies in Israel and abroad – this is a formative and moving event, a kind of public recognition of the exceptional profession she has chosen.
“In recent years, investor relations have become more and more critical to the activities of public companies,” she explains. “The significant goals of our forum are to promote the field in Israel both externally and internally, to increase the number of employees, to raise their professional standards, and to serve as a ‘professional home’ for members.”
What is the role of the investor relations department in a public company?
“It is the connecting function and the intermediary between the company and its current and potential shareholders. In our case, the department I lead is the link between the bank and the capital market in Israel and abroad, and between its investors in Israel and abroad. In general, the department is the spokesperson for the results of the bank and its activity, for example, when the bank publishes its financial statements once a quarter. But of course we are not satisfied with this, and in essence we ‘take out’ all the results and activities of the bank in the capital market. But unlike the press department, which works with journalists and the media, our ‘customers’ are analysts, investors, rating companies and so on.”
And why do you think it is important for every public company to have an investor relations department?
“Because spokesmanship and the positioning of a public company in the capital market is critical to creating value for the company, since the value of the company is derived primarily from its performance, its business model, its products and its growth potential. Marketing these advantages to the capital market is an essential need in a traded company’s life. The IR manager is the one who has faith in the optimal representation of these parameters vis-a-vis investors in a way that creates trust and commitment to the company, its management and strategy. On the other hand, companies which don’t have a connection with investors impair their current ability to raise capital and debt under good conditions.”
It is interesting that in Israel, which is considered a global center for stock issuances and fund-raising, this field, which is trusted by these investors, is limited and not very familiar compared to many Western countries.
“True, but we are narrowing gaps in the field, and the establishment of the Israeli forum is a very important step. We believe that there are only 40 professionals in Israel, and most of us have received accreditation from the National Investor Relations Association. It is important to understand that for investors, this is a very important department. More than once I heard from them, ‘Why isn’t there in every public company in Israel one person I can call and he will give me all the answers to my questions without having to chase down the CFO, the accountant or the marketing manager?’”
Describe the ongoing activities of your department, and of the bank in general, in this area.
“We have an ongoing dialogue with investors, as well as with the capital market and opinion leaders, including analysts covering the bank, the investment bodies themselves and the rating companies. In other words, they are the ones who generate expectations of income from the value of the bank, and from this we derive the target price of the share.”
For example?
“Let’s take anyone who manages money in Israel and abroad, such as institutional investors, hedge funds, pension and provident funds and investment houses. For us, the analysts who work with us are our voice for them. Such an analyst communicates with them, tells them about their business results, their organization and strategy, and in fact deepens their familiarity with us. It is important to note, however, that the potential investor, both in Israel and overseas, will not decide on the analyst’s opinion whether to buy our share, and he will also want to talk to the company itself. So he picks up the phone, talks with us and meets with us.”
What do you think are the important highlights of a professional investor relations adviser’s work?
“To have a deep understanding of the company, its operations and business results from the inside and outside. That’s the main expectation. The advisers will be examined by their ability to articulate the results, plans and vision of the organization they represent in a reliable and quiet manner. This is so that we can coordinate expectations and convey messages to our investors. The analyst receives a report and he knows how to read it. But he usually wants to understand the things beyond, the strategy and the accompanying trends, which is very important, for this we have a trained and professional bank analyst, who is my lieutenant, along with a professional investment adviser.”
And how do you really keep in touch with an audience of investors so complex and diverse in Israel and abroad?
“First of all, we have very high availability, almost 24/7, and we give quick responses. We have work meetings abroad at least four to six times a year. We have conferences and a ‘road show’ – we open up our journals and set up meetings with existing and potential investors. For personal meetings with institutional investors in Israel and abroad every year, the bank’s CFO also joins the board of directors as he is the central speaker of the department.”
In other words, the bank’s management is also involved in this process.
“Of course. The CEO of the bank, for example, meets with important players in the market once a year and hosts them for an open conversation with him and with us. With foreign investors, we hold a conference call in English every quarter on the day the results are published, with each of them joining in and asking questions to the CFO and the staff.”
What is the definition of success in this position, actually in this profession?
“The main objective is to preserve and increase the investor base of the company, which is the quantifiable target of every IR, and also to reflect inwardly the external sentiment toward it, for example, how the shareholders, who are our partners, look at us from the outside. The expectation of any IR is that it will give its managers this feedback, and in this case we are talking about the same external sentiment to the members of the bank’s management and to the members of the board of directors. It is not trivial.”
Why?
“Because it does not happen in most of the companies. We are exposed to both worlds – to represent the bank faithfully, to ensure that its results are reflected correctly, and to be an attentive ear to investors. It is important for the bank to know whether there is a need to improve a procedure or to relate to an investor’s opinion. Our job is also to ensure that there is no separation between these two worlds, and also to cause them to grow from each other.”
And in the midst of all this intensive work, you still find time to take an active part in establishing and leading the new IR forum in Israel.
“It happens first of all because I think every CEO and investor should know that there is such a function, which is a profession in itself, and one of the forum’s functions is to expose this profession. The bank also sees great importance in leading this sector, and it is a fact that it invests resources and efforts in it. As someone who has been active in this field for many years, I really liked the bank’s approach to it and I became very attached to it.”