Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Tuesday, January 22, 2008

What a difference crash makes.

Having spent the last few years being the bad guys, sovereign wealth funds are being sought after as potential sources of funds to assist expansion.

Sovereign wealth funds’ assets are increasing fast, however most have been highly secretive, and guesstimates by analysts vary considerably. According to the FT, Stephen Jen of Morgan Stanley estimates their assets are now approaching $3,000bn, and could climb to $12,000bn by 2015.

Politicians and business leaders in Europe have not been happy about a ‘sell off’ and proposed legislation to make it harder for sovereign wealth funds to take over flagship companies. The US strengthened its vetting process for foreign takeovers.

However, public companies seeking capital in the aftermath of the financial crises, are beating a path to the door of these investors.

These include a growing number of Japanese companies are stepping up investor relations activities targeting investors in the Middle East.

Directors in charge of IR activities at firms like Nippon Telegraph and Telephone Corp. and Sony Corp. have been visiting investors in the Gulf states. The companies are hoping to welcome sovereign wealth funds and other investors in the region to come on board as stable, long term shareholders.

And the change of perception in the intentions of sovereign funds has been boosted by their increased willingness to become more transparent.

For example, Abu Dhabi Investment Authority, the world's largest sovereign wealth fund, has hired Burson-Marsteller to handle its communications. The fund is traditionally highly secretive and largely refuses to comment on deals, and prefers to communicate solely with its network of leading banks and funds.So this new found appetite for transparency is welcome.

Considered one of the most professional sovereign wealth funds, with investments of up to $800bn, Adia has long argued that it is a portfolio investor that seeks limited stakes in companies and no control - a strategy that is not threatening and well understood by the institutions it deals with.

So expect investor relations teams from around the world to be adding some new destinations to their road shows.


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