Frankfurt Notes – IPO: already IR ready?

The windows are opening. While most stock market candidates still had to watch the successful placements of Porsche AG, IONOS and thyssenkrupp nucera behind half-drawn curtains, the IPOs of SCHOTT Pharma and Renk seem to be the starting signal for a whole series of ventures. This is not only an important signal for the German capital market, which has been battered by delistings and flight to foreign stock exchanges, but above all a great opportunity for each individual company to open up new opportunities for growth and development through access to equity capital.

For many of those involved in an IPO project, the celebration on the trading floor therefore represents the climax and conclusion of a milestone. On the other hand, some visitors – especially CFOs and IR managers – probably already suspect that the real work is only just beginning. The experience of IPOs since 2020 shows how important it is to start preparing for the time after the listing at an early stage – and that means at best well before the listing. IPOs can fail not only before but also after the listing. Despite high index levels, the majority of IPOs in the 2020-22 years are listed below, and in some cases even significantly below, the issue price.

In our view, which six topics should stock market candidates have on their radar at an early stage in order to master a successful IPO? What actually constitutes “IR readiness”, i.e. the ability to meet the legal, regulatory and also the communication requirements of the capital market on the day after the listing? We have compiled tips for stock market candidates on six important key points:

New addressees. (Also) the capital market is a people’s business. It’s about trust, access to decision-makers and attention. Take the time to build sustainable relationships at an early stage. Get to know the expectations and working methods of the new stakeholder groups, investors and analysts, and seek contact where possible. We have had good experience with having analysts or investors present internally to finance departments or segment heads, for example. You will benefit from the company’s broad exposure to the mindset and requirements of the capital market.

IR set-up. Secure IR competence at an early stage and prepare meticulously for the requirements of the capital market. Make or buy? The “workerlessness”, in German “Arbeiterlosigkeit”, so described by StepStone CEO Sebastian Dettmers, also affects investor relations. Uncertainty about the timing and ultimate success of IPO plans makes it difficult to get experienced IR managers excited about IPO projects. A specialised IR consultancy like ALLINCAPITALS can help to master this crucial phase and to gradually build up an own IR department after the IPO. Often thought of and from our point of view not a good idea: those who initially leave the tasks in the CFO’s office overload his capacities. The CFO risks not being able to meet the IR or other growing tasks of the finance department.

Financial reporting. Every issuer knows the question of its own fast-close capability. It is indispensable that the figures are available early and quality-assured and that the future business development can be reliably forecast at any time. But in which reporting and presentation format does the issuer present its interim report six weeks after listing? How does an analyst call actually work and how do you answer critical or surprising questions? Perception matters. If you “only” report on time, you avoid trouble with BaFin and the stock exchange. But such minimalism does not convince investors and analysts. If you want to score points here, you should definitely use the time to plan, prepare and test.

ESG. When you hear the word ESG, do you first think of strategic anchoring, extensive data budgets and fast-close processes – and only secondly or thirdly of beautifully illustrated stories around examples from the corporate world? Then we think you are on the right track. ESG communication should reflect the integral embedding in the business model and the equity story – and it must also meet many regulatory requirements. It is a key element in ensuring investability. However, in our view, investability requires a sufficiently large investor base, not access to all. This means focusing on the essentials and, in the case of special requirements from rating agencies or investors, also having the courage to leave gaps.

Internet presence. Until they are listed, companies put very little IR content on the internet. This changes afterwards with the aim of establishing the internet site as an important medium and limiting the number of direct calls and emails to the IR team to a manageable level by offering good information. Is your concept for the internet roll-out ready? Is your company homepage suitable for integrating the IR page as a subdomain, or does it need a fundamental overhaul? Do you make it easy for multipliers to share content via social media and thus increase your reach?

New regulatory requirements. At the latest when the price for the IPO is set, the topic of “ad hoc announcements” is on the agenda. What can be planned and foreseen in this phase of the IPO process often comes as an unplanned and surprise later – ad hoc. It is therefore all the more important to be prepared for these situations in the best possible way – through a defined ad hoc committee, a coordinated decision-making mode and, above all, through intensive testing based on conceivable situations and cases: When will there be a reasonably reliable forecast for the annual result? What happens if the plant in Romania is down for three months? Are you able to make decisions when the CEO is on a plane to Tokyo?

Use the time before you go public to present yourself in the best possible way – not just when the spotlight falls on you as a listed company. Do you have questions about your IR readiness? Don’t hesitate to contact us.