Lessons in courting overseas investors.

• Author: Weaver, Constance K.
• Position: MCI's investor relations effort - Includes related article - Investor Relations

When MCI decided to develop a strong investor relations presence in Europe, it conducted a fact-finding mission to learn more about the market. Here's what it found.

It's axiomatic that American companies operating globally must have a presence in the world's capital markets. The process for establishing that presence, however, is anything but self-evident. What's appropriate for Consumer-Product Company A is not necessarily the best course for Construction Company B. Also, companies often need to assess whether they need an international investor relations program or to expand further into second-tier U.S. markets. For MCI, deciding how best to introduce ourselves to overseas investors required a blend of strategic targeting, cultural sensitivity, knowing the strongest players among the various institutions and understanding how those players make buying decisions.

In eyeing Europe for an investor relations focus in the early 1990s, we had too few of these facts to direct a credible research effort, much less create a plan of action. So before making any large investments in time or money, we decided to do our own legwork, which started with an in-house effort to first understand the environment and then to establish clear goals and strategies.

Senior management approved a fact-finding trip to Europe for the investor relations staff. The overall objective was to assess the international opportunities so that we could recommend the right program. We needed to speak with the players, including both buy-side and sell-side analysts, consultants and others. Plus, we had to determine how likely they'd be to invest further in U.S. equities. To do that, we needed to learn how and why these investors bought American stocks and what kind of service they expected.

As our first step, we decided to learn as much as possible about MCI's existing foreign ownership base. The Securities and Exchange Commission's 13-F filings aren't required overseas, so we were deprived of one important source of information. So we enlisted the support of a targeting and surveillance firm to track who our investors were and to take an initial "snapshot" of our overseas shareholder base.

At the time of our investigation, the level of European investment in U.S. equities was at a low point, running 6 percent to 8 percent below normal levels. We found that the European market's primary concerns were the sluggish U.S. economy and the perception that the U.S. equity market was...