Q&A: What it’s like working in investor relations in Russia

We asked Andrey Urzhumtsev, Partner and Director of the Investor Relations practice at EmCo what Russian investor relations careers are like. This is what Andrey told us.

Q: What’s your current job and who do you work for?

A: I’m a Partner and Director of the Investor Relations practice at EmCo, a consulting company founded in 2008 which specialises in IR and strategic communications. Our clients in the IR area are large Russian corporates whose shares are traded inRussiaand abroad. We help them interact regularly with analysts and investment funds, analysing the valuation models built by sell-side research for a fair valuation of share price, investor targeting and profiling, as well as with all aspects of investor disclosure in compliance with regulator demands and in accordance with best practice.

Q: What attracted you to a career in investor relations?

Investor Relations seemed a great opportunity to use both my financial expertise and my communication skills. The IR area of EmCo’s business was a start-up project that I joined at the outset in 2008 and have been developing for nearly four years now.

Q: That sounds interesting, what were the challenges you faced at the beginning?

When I started working in IR I was already well familiar with the workings of International capital markets but was less familiar with the Russian market.

When you work as a consultant you are expected to give expert advice and opinions on a wide range of subjects, thus I had to learn on the job, and very fast.

Q: How does working as an investor relations consultant in Russia differ to working elsewhere?

The differences are not so much in the working know-how as in the specifics of Russian issuers.

These are often state-controlled companies, and investors - especially foreign investors - have to be convinced that management is, on the one hand, honest and accountable to shareholders, and on the other hand, represents the interest of minority shareholders as well as those of government policy in a particular area.

This conviction comes as a result of seeing practical achievements, and neither the internal IR specialist nor the IR consultant are able to influence investors with their efforts alone. Thus a major part of the job consists in informing internal management about the actions that are necessary, or conversely, that are unacceptable in their dealings with investors.

Another image-related issue is that the state tends to play fast and loose with state-controlled company cash flows, using them to solve ancillary tasks, often those of a social nature. Investors who want to contribute to charity do so directly, but really dislike it when those sorts of decisions are taken for them. IR specialists often find it hard to come up with the right arguments in such cases.

Yet another feature of the Russian market and many emerging markets is the predominance of young companies where ownership and management are not separated, i.e. the owner is also the manager. This exacerbates the issue of information asymmetry where owners of large stakes who are also managers know infinitely more about the company than minority investors do. Thus transparency and disclosure become the key issues in raising the company’s attractiveness to investors. Russian owners who are prepared to commit to this are able to get impressive results in international capital markets

Q: And what are the greatest changes you face now?

Now the greatest challenge is to help achieve the clients’ long-term goals, such as increasing the liquidity of their depositary receipts at foreign stock exchanges or perfecting their internal corporate governance systems. But these are usually the most interesting tasks.

Q: How do you typically spend a working day?

Unlike work at a company’s internal IR department, consulting is, above all, a business.

As practice director I am responsible for developing it, attracting clients and finding solutions to specific tasks they pose.

Thus my work involves meetings with clients and phone contacts at all times. Another aspect of my work is communicating with analysts and investors, many of whom work in different time zones. Thanks to modern telecommunications we get a lot of things done right here in our Moscow office, but we have to adjust to our clients’ needs when planning our working day. That said, it isn’t always that my working day and those of my colleagues are spent communicating. Things like spending long hours with Excel spreadsheets and preparing documents like MD&A (Management Discussion and Analysis) are also an integral part of the job.

Q: What kind of background do you have? Have you always worked in investment consulting? – And aways in Moscow?

I came to IR from a mixed background. After graduating form the International Division of theMoscowStateUniversity’s Journalism faculty, I worked in news journalism for some time before going toBerlinto get a second degree that was much more business-related. That allowed me to find an interesting job inLondonas a financial consultant. However, the financial crisis that began in 2007 decimated the market for consulting services and made me decide to move back to Moscow.

Q: Are there any typical routes into investor relations careers in Russia?

A few years ago inRussiait was common to see new entrants into IR being PR specialists who had been told by their bosses that they were now also responsible for investor relations. Nowadays, this is a lot less common. Since IR requires financial expertise, most people coming into the profession now have a background in investment or finance.

However, financial expertise alone is insufficient. You also need a good understanding of marketing principles and techniques and how to adapt them to capital markets. You need basic legal expertise in order to comply with the requirements of financial regulators in various jurisdictions. And if we are talking about work in IR consulting, you will also need good business skills.

Q: What about qualifications? Are there any specialist qualifications people who want to work in investor relations in Russia should take?

I am not aware of any Master’s Degree level programmes that would train IR specialists; the demand inRussiaand abroad is not so great as to make this into a mainstream degree. It is probably most helpful to get an economics or finance degree; also, the knowledge you get from the CFA Institute programme is very useful in this area.

Q: Are there any common myths and misconceptions about IR work?

It is a common myth that a good IR specialist must always persuade investors to buy. In reality the IR specialist’s job is to make investors understand both the opportunities and the risks involved in investing in the company. This will enable them to take informed decisions and is the only way to gradually build up a trusting relationship with investors and analysts. Whenever an analyst issues a 'Sell' recommendation for a security issued by a client of ours, we always thoroughly study their arguments. Sometimes it is a balanced recommendation justified by the security being objectively ‘overbought’, but sometimes it proceeds from a lack of information about the company that we do our best to compensate for.

Q: Thank you for your time. Lastly, can you give three tips to people who would like to work in this area?

Practice putting your thoughts in writing; even a very experienced financial specialist won’t be able to work in IR without excellent English and Russian writing skills.

Don’t think that the position of an IR director at a large company is the most you can get to as an inhouse IR specialist. The experience in corporate finance, strategic planning, corporate governance and strategic communications makes such specialists into great candidates for top management positions.

Communicate and develop your network. The more investment professionals you know, the greater your chances of professional success in IR.