Liquidity Enchancement Program
A publicly traded company engaged in the retail sector, which is listed on the Mexican Stock Exchange since the 90s, has noted that its liquidity has declined to the low liquidity category of the Mexican Stock Exchange’s ranking, coupled with a greatly reduced trading activity. The company decides to resume and strengthen its IR program, after entrusting it to its treasury and comptroller departments due to costs.
Through the revitalization of its IR program, and a comprehensive counseling in corporate finance and trading techniques, the company seeks to reposition its stock to a point where it can obtain the sufficient liquidity and valuation to carry out a follow-on, which in turn provides the necessary resources to move forward in implementing its core business plan.
For its proven capacity and experienced team, IRStrat was chosen as the best option to lead the repositioning project of the company's stock, through its tailor-made solution of Liquidity Enhancement; with the mandate to design and implement strategies of trading, issuance, prospecting and investor base broadening, as well as improving the visibility and perception of the company in the markets, with the objective of achieving a better liquidity and valuation.
IRStrat carries out an integral assessment of all relevant factors having a bearing on the trading of the stock (IR program, trading concentration, floating composition and market participant’s perception about the issuer). With the collected information, IRStrat prepares a road map to reposition our client in the markets and put it to the forefront. Additionally, a detailed work agenda is defined, containing clear targets of trading (volume, number of operations and median transaction), visibility (investment recommendations and analyst coverage base), and valuations (P/B and EV/EBITDA).
Our team, working with the senior management, begins to develop the company’s investment thesis, history and competitive advantage, as well as the communication style (qualitative and quantitative), and an optimal prospecting and communication strategy.
A detailed perception study is carried out, which allows identifying critical improvement areas, and a share ownership proxy is constructed, which outlines in depth the profile of the issuer’s current investors. With the intelligence gathered, the trading strategy is developed, that is to say, the operation of a stock buyback program, the operation of a market maker, as well as the design of other alternative treasury techniques. Hand in hand with the latter, IRStrat develops an optimal prospecting and communication strategy, which includes an intensive agenda of presentations to the marketing and analysis departments of brokerages, focused on expanding awareness and interest in the company and its stock, as well as broadening analyst coverage base.
IRStrat performs a thorough training of our client's executive team in financial communication. All IR materials are insightfully developed to ensure optimal quality (quarterly earnings release, annual report, investor presentation, IR website and investor fact sheet). Likewise, short- and long-term guidance is developed and widely communicated.
The valuation and trading of our client’s stock greatly improved, and bolstered its positioning in the financial markets, enabling it to execute a follow-on for 450 million dollars, which in turn allowed it to enhance its stock trading, developing a virtuous cycle. After the completion of the follow-on, the company had an analyst coverage of over 10 institutions, including the most influential local and international brokerages.