Handling Investor Relations during a Crisis: Lessons Learnt from the 2011 Egyptian Revolution

This is a guest post from Omar Darwazah, Director, Investor Relations at OCI N.V.

It seems that the entire world is in a constant crisis today. From Argentina to Russia to Turkey to the United States, there has been no dearth of crisis management situations which investor relations (IR) professionals have had to face. Whether it be political upheavals, civil wars, border disputes, fiscal disasters, wild foreign exchange fluctuations, military coups, capital controls, crazy presidential candidates or deeply entrenched state-sponsored corruption, investor relations professionals globally are finding it more difficult to craft their respective companies’ equity theses and messages to the investment community without finding themselves having to discuss geopolitics and global socio-economic trends. In 2011, I was Director of Investor Relations at Orascom Construction Industries (OCI) in Cairo, Egypt. I found myself in the middle of a historic event; I faced a systemic crisis that plagued the entire country as well as the company, it would forevermore change Egypt and its investment landscape.

On January 25, 2011, I readied to attend an annual Bank of America Merrill Lynch investor conference like I had done in years past. I boarded an 8am flight from Cairo to London to kick-off to OCI’s investor relations program and prepared presentations to current shareholders and prospective investors. Upon my arrival in London five hours later, however, the Egypt I had always known — run by the ironclad dictatorship of Hosni Mubarak and the brutality of his state police — had changed forever. A revolution was in the making. Thousands of people took to the streets to peacefully demonstrate en-masse against the regime. While I conducted meetings with investors on January 26, the state police clashed with protestors, the demonstrations turned violent, and the Egyptian equity index crumbled. The investors I was to meet at the conference turned to me for unbiased, candid interpretations of events on the ground.

As the revolution unfolded, the company’s CEO entrusted me to continue meeting investors. For 3 weeks I operated in crisis management mode and conducted over 70 one-on-one on-site meetings in London, Dubai, New York, Boston, Chicago, Frankfurt, Zurich, Geneva, Amsterdam and The Hague. JPMorgan invited me to lead a conference call with investor relations directors from other Egyptian blue-chip companies to advise them on handling the crisis. There was no hand-in-glove approach to managing the situation but I did share the following observations with my colleagues:

1. The challenge of speaking to investors throughout the Revolution was primarily exacerbated by the lack of visibility on the ensuing chain of events
2. Communicating with senior management on the ground in Cairo proved to be difficult given the lack of internet or mobile phone access throughout the 18 days of the Revolution
3. For a contemporaneous update, I relied on speaking to various team and family members as well as friends by landline in order to provide investors with candid advice on the situation
4. The routine questions on the performance of the company were never even asked and investors turned to me for unbiased interpretations of the unfolding events
5. I combined my in-depth knowledge of Egypt, undergraduate training in Political Science and Economics and oratory skills to field difficult questions and deter a crisis within the global investment community. Speaking on behalf of the company and its performance became secondary in importance

In hindsight, the mere fact that I was present outside of Egypt and able to travel and meet investors proved to be extremely valuable. While serendipitous, the lesson learnt during my experience was that irrespective of the gravity of the crisis at hand, it is pertinent for IR professionals and management to be readily available and present to meet with the investment community even if they have bad news to report to them. That year, I ended up conducting over 300 one-on-one meetings in 25 cities globally. Here are some key takeaways from my experience:

1. Investors appreciate full transparency and candidness during periods of high market uncertainty
2. As an IR professional, be ready to simulate various scenarios during one-on-one meetings with investors with subsequent potential risks and mitigants of these scenarios
3. Be ready to discuss broad topics that are typically not addressed during routine investor meetings
4. Exogenous factors affecting company performance in times of uncertainty should be quantified as much as possible (i.e. impact on earnings, days of business interruption etc.)
5. During a crisis, liaise closely with senior management and provide key updates and feedback from the broader investment community including analysts and investors as this helps with internal risk management
6. Keep an open line of communication with the market, be ready to conduct a significantly larger number of investor meetings and global roadshows
7. Disseminate factual information in writing in official company documents (i.e. press releases and results presentations) but leave speculative discussions, political opinions and forward looking statements in conversation only
8. The best line of defense in a period of high and consistently evolving uncertainly proved to be a good offense (i.e. an aggressive roadshow strategy and meeting schedule)

That year, OCI’s share price outperformed almost all blue-chip companies on the EGX30 declining 30% versus almost 50% for the EGX30. Moreover, my crisis management strategy was acknowledged by the Middle East Investor Relations Society (MEIRS). As voted by the global buy-side and sell-side community, I won the MEIRS “Best Investor Relations in Egypt” award that year. I will no doubt face other crises during my IR career, they might not carry the same severity and intensity of the Egyptian Revolution in 2011 (or maybe they will!) but I believe the aforementioned takeaways are valuable in a multitude of crisis contexts; remember candidacy first, always.