Role of IROs reinforced after COVID-19 pandemic as investors seek more information: Al-Rumaih

Mohammed Al-Rumaih, CEO, Saudi Exchange

The COVID-19 pandemic has increased the need for investor relations officers (IROs) as investors seek additional information, especially business continuity and recovery plans, said Mohammed Al-Rumaih, Chief Executive Officer (CEO) of the Saudi Exchange (Tadawul).

“The IROs bridge the gap between the boardroom and shareholders by ensuring investors’ needs are addressed, and management decisions are communicated across all the stakeholder groups,” he told Argaam yesterday (Oct. 25) on the sidelines of the MEIRA 2021 – “An Odyssey from ESG to IR” conference.

He stated that a lack of transparency in regional companies could sometimes lead to investors making assumptions of the market, catering to volatility and loss of market value.

Therefore, an efficient and strategic investor relations plan is essential in restoring faith in the company’s growth prospects, the CEO said.

“As competition for foreign capital intensifies within the region and more companies go public, investor activism will increase in the coming years as investors - local and foreign - and retail institutions look to have more say in the company’s strategic or organizational changes.”

In 2017, Tadawul signed a memorandum of understanding (MoU) with the Middle East Investor Relations Association (MEIRA) to launch a comprehensive toolkit based on global best practice approaches to assist listed companies in enhancing the quality of their investor relations.

“Over the recent years, the toolkit has served as a guide and helped listed companies and companies considering listing on the exchange enhance the quality of their investor relations,” Al-Rumaih said, noting the toolkit as a major milestone in developing an advanced and open market for the world.

The toolkit provides practical tips on investor class relations programs, information on board integrity, principles and analysis on measuring the value of investor relations.

Al-Rumaih said that there had been a tremendous increase and interest from the companies to adopt the investor relations best practices, although the guidelines are not regulatory.

“There is a competition in attracting liquidity and attracting the interest of the institutional investors, whether local and foreign. The incentives are there for them to enhance the level of IRO practices.”

When asked if Saudis were taking up IRO roles in listed companies, the CEO said that Tadawul is driving the change and improving the investor relations career among the Saudi youth.

“The percentage is high when it comes to Saudization. We look forward to having a very healthy market where the supply and demand reach equilibrium.”

Regarding IRO training, Tadawul has undertaken different initiatives with the financial academy to launch the certified investor relations officer certification, as well as going to colleges and business schools to create awareness on the future of the capital markets professionals.

“Since investor relations is on the rise, we expect more demand. We want to ensure there is enough supply in the market,” he concluded.