“More Analysis of Stocks is Needed if We Want Alternative Sources of Financing to Banks”


Fernando Rodríguez | Daniel Lozano, Director of Investor Relations and Communications at Grenergy, was the winner in the rising star category at the IR Magazine awards – Europe 2020. Lozano began his career as a financial analyst at Abengoa and was part of the teams that helped MasMovil and more recently Grenergy, whose team he led, to move from MAB -now BME Growth- to the Continuous Market; so far, the only companies to do so.

In 2020, over half a dozen Spanish companies were nominated in different categories for the IR Magazine awards Europe. On a global scale, what is your opinion on the quality of IROs ? What are their strengths and where do you see room for improvement?

In the global context, IROs in other parts of the world do not have such an influential role as in Europe, and funds know this, so they do not see them as reliable sources. In Europe IROs are valued, and it is not by chance that Spanish IROs appear on rankings and win awards. We have a good reputation because we have people who are outstanding in technical and personal terms, whose role is becoming more and more influential, and who are present in the most important financial centres in this highly competitive world of capital markets. As regards the areas where there is room for improvement, I do not think there is anything generic that can be applied to the whole sector, but perhaps we should be able to adapt to the speed that digitalisation provides, and at the same time hold more events for investors, possibly less complex and structured, which will help them to get to know a company better.

Institutional Relations Officers (IROs) are increasingly being included in company management teams, either permanently or for regular presentations, and at the same time they are also gaining autonomy from finance directors. What do you think of these two trends?

I started my career in the financial world, and while it is key to have an accounting and analytical background, the qualities required in capital markets are quite different. We, IROs, need a deep understanding of communication and strategy, medium-term vision and we also need to be able to anticipate the impact of the decisions made by management teams and boards, so that they bring value to the company in any case. By being present when these decisions are taken, we can help align the interests of the investors of a company in the search for the right strategic direction which will generate value for its shareholders.

BNY Mellon’s biannual IR survey indicates that there is a growing demand for information from companies, in particular information about their ESG  performance. What are institutional and individual investors now asking for?

Transparency towards investors generates confidence and helps reduce investment risk. More and more information is available and there is a need to sift through this information and make it understandable. Likewise, investors are increasingly concerned about non-financial performance indicators related to environmental processes, social impact, and governance. This is entirely positive, because it gets boards to focus not only on reporting these indicators, but also on improving them. This is undoubtedly a capitalist way to improve the world, and companies and sectors that do not take this into account will be edged out of capital markets.

How are the obligations imposed by MIFID II influencing IR policies?MIFID II is causing many analyst firms to disappear, and making those that remain reduce the quality of their reporting in many cases if they want to be competitive. This results in less information available about companies with reduced liquidity,  which further impairs their liquidity. They become ineligible for institutional investing and find it more difficult to raise capital, so being listed becomes less attractive. This must be solved now if we want alternative sources of financing to banks. On the other hand, investors are no longer paying for analysis, and they increasingly rely on IROs for information, so our workload is increasing. That is why we must continue to train good IROs, and if we want to provide this service, IR departments should grow.

About the Author

Fernando Rodríguez
Fernando Rodriguez is in charge of PR and Development at The Corner. He has worked for over 30 years for financial publications like Expansion, El Economista, Dossier Empresarial, Ciudadano and Afa Press-Worldfolio and has been a contributor to El Pais-Negocios, Emprendedores, Época, Sector Ejecutivo and Consejeros. Fernando holds a degree in Journalism from CEU-San Pablo (Complutense University) and a master’s degree in Strategic Communication from CESMA business school. As a communication consultant, he has developed PR projects for firms like Grupo Bancaja, JP Morgan, GBS, Corpfin, QBE, Howden, Asociación Española de Leasing y Renting (AELR) or Asociación Española de Accionistas Minoritarios de Empresas Cotizadas (AEMEC).