How the Investor Relations is resonating in Brazil

Despite the quite uncertain times because of the pandemic, Brazil has been facing a significant rise in the number of initial public offerings. So far, almost 30 companies have gone through IPO’s with over R$ 30 billion in fundraising, such figures are far below the record year of 2007 with 64 new listed companies and R$ 55 billion fundraised.

In addition to the quite distinct economic outlook 13 years ago, there are some subtle; however relevant differences in the profiles of the IR officers nationwide. In 2007, most of the investors were from abroad because of Brazil GDP’s growing curve and the flow of investors from developed to emerging markets due to the subprime crisis in the US and Europe. Brazil now faces a much higher ratio of local investors, which has been demanding from IR executives a more accurate understanding of local governance standards, dealing in some cases with a different modus operandi to gather market information to understand the long-term growth strategy of companies that intend to go public.

The 2007 boom made the local IR officers adopt a more institutionalized speech and defined a more segmented area that, in many cases, lied more often on international best practices, including at times a not so close internal relationship between IR and the other areas. IR executives even acquired database and CRM systems from outsourced providers instead of building and implementing it themselves. Nowadays, the IR executive in Brazil must do much more with less, which means rolling up the sleeves to better understand the company’s business model and sales processes plus creating valuation models on their own. The ones who understood and adapted to this new environment were those who, in many cases, have been offered new responsibilities in addition to solely Investor Relations. Situations in which IR executives also accumulate M&A, strategic planning and new business have become a turning point in the career path of local IR officers, some of them are even transitioning their direct report from a CFO to a CEO.

With this quite unstable scenario, we realize that the local capital market has matured. Investors have become much more selective due to past IPO’s that looked very promising but did not take off. The current rise in local IPO’s does not seem to configure a bubble, but the attitude to focus more on execution and develop a more protagonist mindset has been making a difference. 

With the imminent IPO’s in Brazil, the IR professional has also to deal with a strong risk component by assuming situations of joining companies in pre-IPO’s for instance. The fundamentals of finding seasoned Investor Relations officers have not changed dramatically, but the willingness to the hypothetic situations of having to organize roadshows or unexpectedly accompanying potential investors in guided visits without the support of an executive assistant or an analyst may be an indicative of how this type of resilience is necessary in times like these. Are you ready to be part of the solution?

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