A dive into the IR scene in the Kingdom

Some 31% of companies plan to raise investor relations budgets by 1-5%, according to the 2023Investor Relations (IR) report (pdf) by Argaam and Middle East Investor Relations Association (MEIRA). Meanwhile, some 17% of companies plan to increase their budget by 6-10%, and 22% by 11-20%, while 28% have no plans to increase spending. Annual IR budgets range from SAR 1 mn to 9 mn.

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Report methodology: The report surveyed IR officials from 40 listed companies, representing 17% of the Kingdom;s main capital market as of 2023. It examines IR's evolution as a strategic asset within the Kingdom's investment ecosystem.

Effectiveness of IR departments: Survey findings show 36% of respondents believe IR departments significantly impact strategic decisions, while 41% see a moderate impact. Regarding financing, 31% think IR teams support financial departments, while 36% feel they have “nothing to do with financing.”.

Investor base composition: Individual investors “are an important part of” shareholder bases according to 97% of respondents. Other shareholders include joint stock and limited liability companies (87%), capital market institutions and public entities (72%), government funds (69%), and charities or social associations (77%). Only 3% noted investment funds and public joint stock companies among their shareholders.

Communication and reporting gaps: Challenges in communication persist, with 13% of IR officials saying they don’t engage with Boards, and 24% failing to provide their Boards reports on share performance or substantial changes. Only 20% of IR teams represent their companies publicly, while 44% have no plans to adopt this role.

IR pages need some work: Around 69% of respondents indicated their IR pages need improvements, with 39% seeking moderate and 21% seeking significant upgrades. Meanwhile, 18% acknowledged the need for development but have no immediate plans to carry them out.

Disclosure practices: Most surveyed companies (96%) adhere to immediately disclosing information on Tadawul, but only 41% consistently explain financial impact. Investor engagement following disclosures remains rare.

Challenges and success factors: Key obstacles facing IR departments include a lack of qualified professionals, low salaries, and limited specialized training. Success factors highlighted include fostering strong investor relationships, supporting top management, and ensuring independent IR representation in leadership. The report underscores the need for better communication, enhanced training, and strategic integration to optimize IR roles.