The relationship between smaller companies and institutional investors should be one of symbiosis, a...
The relationship between smaller companies and institutional investors should be one of symbiosis, according to Standard Life's Harry Nimmo.
The manager of the A- rated Standard Life UK Smaller Companies fund, delivered his message, 'forging closer relationships with fund managers' to a closed meeting of smaller cap chief executives and finance directors at the London Stock Exchange last week.
Nimmo said: 'What I was trying to get over was that we depend on them as much as they depend on us and the relationship should be symbiotic. We have made the most money by buying and holding smaller companies over a number of years.'
He called for smaller companies to be more pro-active in meeting with fund managers by selling their product or service better and highlighting why this exceeds any competitors' offering and what barriers to entry their industry has.
He noted: 'The first problem for smaller companies is really getting in front of fund managers. There are around 1,100 fully listed companies outside of the FTSE 100 and that is a lot to choose from, so a smaller company has to shout loudly to be heard.'
There are around 100 institutions seriously committed to investing in small caps long-term, according to Nimmo, and company management should try and gain an audience with as many investment players as possible, even if it already enjoys strong backing.
A corporate stockbroker or adviser can be crucial in maintaining smaller companies' relationships with institutional investors, Nimmo said, and companies should be willing to pay for such a service, even if they currently have adequate backing.
Nimmo said: 'They should look for an adviser who covers their sector well and is committed to looking after their size of company. Their adviser can help them by telling them what the aims and styles of different institutional investors are so they can be aware how best to pitch their particular message.'
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