Being an IRO for a publicly listed company can bring great moments – the buzz after a great earnings call or some great investor feedback or a day when the share price responds positively to a transformative transaction and life as a publicly traded company feels great. 

But for most IROs there, will come a day when – after a less than successful roadshow, a challenging conversation with an activist investor, a significant one-day share price drop, an article about the latest unicorn’s funding round (or maybe just a really great conversation with a charming private equity player) – the CEO or CFO will sigh and say “You sometimes wonder why we are public...”

It is the equivalent of an eight-year-old shouting “I want different parents…” and as the IRO, those moments might make you want to break into a rendition of Kermit from the Muppet Show, singing It’s Not Easy Being Green…

It's not that easy bein' green
Having to spend each day
The color of the leaves
When I think it could be nicer
Bein' red or yellow or gold
Or something much more colorful like that

If a reminder of all the great moments isn’t enough to get them smiling, here are a few key suggestions as to what you might say instead to get them back on track and convince them that green is beautiful, it’ll do fine and it’s what they want to be:

• More capital: There still is more capital in the public markets. Remembering that most companies go public to access capital to grow, it is easy to focus on the growth that private markets have seen in recent years and sometimes hard to remember that the headline numbers around public market AUM is US$90+ trillion[1] at the end of 2020, while McKinsey figures in 2019 pegged private markets around US$6.5 trillion[2]. If capital is what they are after, remind them of that.

• Lower cost of capital: Historically, companies also go public to access a lower cost of capital. As private markets have grown, they have also become deeper and more competitive but a company accessing large pools of capital at the lowest cost of capital will still benefit from being in the public markets and will be able to access equity and debt at lower cost and with fewer borrowing conditions and less restrictive covenants.

• Clear rules around how to access capital: While it remains true that the means to access that public capital may not always be as easy as it should be, the processes are transparent. And as the Ontario government considers some of the recommendations of the January 2021 report around the Capital Markets Modernization Taskforce[3] – such as recommendations regarding alternative offering models and well-known seasoned issuer models like those that exist in the U.S. – there is some hope that the burden, time and cost required to access markets could ease.

• Access to more investors and a clear valuation tool: While private markets have grown, the reality is that it can be challenging (and time-consuming) to find investors who buy into management’s strategy and vision, are prepared to invest at the right levels on the timelines you have in mind and manage relationships with them over a number of years through multiple financing rounds where valuation is a debate. In public markets, the right price for a clearly articulated strategy with a track record of execution will be set by the market and (with the help of a good IR team), the market will find you!

• Disclosure and investor protection will be important no matter what: Whether you are dealing with private or public investors, some things will remain true. First, you will need to be able to explain your strategy and your track record clearly and with conviction. Second, you will need to provide disclosure to inform an investor’s decisions. And investors will need to feel they have protection or an exit if things go badly. In public markets, that can mean activism or selling, but within a rule-based framework. In private markets, that can look far uglier.

• Easier access to advice, benchmarking and talent to grow: Being in the public eye can be a challenge sometimes but the process of reporting externally allows you to give the market an ability to size up your company and gives you an ability to size up your company against peers. It can galvanize change with existing employees and help bring new talent (and new investors) to you. Remember too the great competitive intelligence and advice on strategy that can come from sophisticated, smart investors who look at other companies daily and have a vested stake in your company.

• A move towards long termism: When things are not going well, it is easy to accuse investors of thinking short term and focusing on the quarter and to be sensitive when performance doesn’t stack up. With a move to more ESG integration, the reality is that the biggest investors in the market (both public and private) are more likely to ask you about how your business is addressing long-term issues and that your investors are really more concerned about short-term performance as a signal of a deeper underlying challenge to the business. If you can articulate the longer-term path clearly, most investors will easily see through short-term challenges or investments and support you in making change. So think about why you are having a bad day or quarter or year and ensure you are addressing the longer-term issues that will drive investor confidence.   

• The bigger picture: The public markets can feel crowded at times but from a larger public interest point of view, it is helpful to remember that public markets play an important role in the retirement plans of millions of people and that as a publicly listed company that delivers returns to shareholders, you give those individuals an opportunity to share in that growth.

And if all else fails, you can always carry on singing:

It's not easy bein' green
It seems you blend in
With so many other ordinary things
And people tend to pass you over
Cause you're not standing out
Like flashy sparkles in the water
Or stars in the sky

But green's the color of spring
And green can be cool and friendly like
And green can be big like a mountain
Or important like a river or tall like a tree

When green is all there is to be
It could make you wonder why
But, why wonder? (why wonder?)
I'm green and it'll do fine
It's beautiful. And I think it's what I want to be.