Companies planning to go public or list on the Indonesia Stock Exchange (IDX) often prepare an equity story. But why is an equity story important in the IPO process, and why must a company do it?

Equity story is a strategic narrative/story that is designed to convince investors why a company is investment-worthy. An equity story tells the story of a company's value propositions, business prospects, financial performance, long-term growth strategy, and their competitive advantages.

An equity story plays a critical role as the main narrative behind a successful Initial Public Offering (IPO). This document serves as a summary of considerations for investors in making decisions to invest in company shares. Investors will assess various aspects such as investment potential and prospects, investment ticket size, and investment duration or hold duration on shares purchased during the IPO.

 

 Table of Content

Purpose of Developing an Equity Story

Key Aspects of an Equity Story

The Difference Between Equity Story for Retail Investors and Institutional Investors

Challenges in Developing an Equity Story

Building a Sustainable Equity Story

 

Purpose of Developing an Equity Story

The main purpose of an equity story is to build investor appeal. To achieve this goal, an equity story highlights various matters related to the company’s operational growth potential and sustainable profitability. In addition, the equity story also provides an insight of the company’s future business direction and showcases the credibility of its management team. Through an equity story, a company can justify its valuation, which is reflected in the offering price per share during the public offering or IPO process.

 

Key Aspects of an Equity Story

When developing an equity story, there are several key aspects that need to be considered to ensure the company’s narrative/story is attractive to investors while clearly reflecting its values and business prospects.

 

1. Company Overview

Provides an overview of the company, including its business model, vision and mission, operational strengths, and its position in the industry. The products or services offered and how the company runs its business efficiently and sustainably are also explained.

 

2. Growth Strategy and Competitive Advantages

Outlines of the company’s expansion strategies, segment diversification, new product development, and growth targets for the next 3–5 years. Emphasizes the company’s competitive advantages or unique selling proposition (USP) compared to local and global competitors, and what sets its positioning better than its competitors.

 

3. Industry Trends and Market Opportunities

Position the company in the context of industry trends and market opportunities, including market growth, sector prospects, macroeconomic and regulatory factors, the company's position in the value chain, and resilience to market risks and technological developments.

 

4. Financial Performance

Solid and transparent financial performance is essential to support the narrative because it demonstrates strong fundamentals. This includes data on historical revenue and profit growth, profit margins, operational efficiency, balance sheets, and key performance ratios (ROE, EBITDA margin, etc.).

 

5. Use of IPO Funds

Clearly and measurably explains how the IPO funds will be used. Investors need to understand how IPO funds will be allocated productively to create added value and improve company performance post-IPO.

 

6. Credible Management and Corporate Governance

Investors need to know who the key persons behind the company are and what makes the company special. This presents the management profiles, track records of management and directors, ownership structure, shareholder support, and the implementation of good corporate governance (GCG) and regulatory compliance practices.

 

7. ESG Factors and Long-Term Value

Global investors are now paying close attention to environmental, social, and governance (ESG) aspects. Therefore, commitment to sustainability as well as social initiatives and environmental responsibility have become important factors that need to be communicated.

 

The Difference between Equity Story for Retail and Institutional Investors

The core message to both retail and institutional investors is the same. However, what differs them is the way the information is conveyed, the content of the information, the focus of the message, and the depth of information, which is tailored to the target audience/target investors.

Aspect	Retail Investors	Institutional Investor
Language	Simple and easy to understand, not too technical, with an inspiring tone.	Technical with in-depth analysis and detailed fundamentals.
Focus and Perspective	Focus on market momentum and emotional appeal, with narrative telling the company’s future vision and impact.	Focus on fundamental valuation and capital gain potential, including financial performance, strategy, market positioning, and sustainability aspects (ESG and GCG)
Format	Engaging formats such as infographics, videos, social media campaigns, or investor gathering.	Professional format such as investor presentations, prospectus, or one-on-one meeting (non-promotional)

 

Challenges in Developing an Equity Story

In the IPO process, developing an equity story is often a major challenge for companies. Despite having strong business potential, many companies struggle to craft a clear and compelling story/narrative. Often, the explanations are too operational and fail to explain the connection between how business strategies can generate long-term growth and profits. As a result, the main message becomes unfocused and fails to highlight the company's competitive advantages

Another challenge is the lack of solid supporting data. Strong business growth and good market share must be supported by solid data, yet companies often fail to emphasize. Investors need evidence in the form of historical data, realistic projections, and transparent explanations of risk. Without these, the equity story is considered overly promotional.

Companies also need to balance between overoptimism and realism so that their narrative remains interesting but credible and does not overpromise. Overpromising can harm reputation and investor trust if post-IPO performance fails to deliver. In addition, many companies also struggle to highlight their unique selling points, which are exactly what investors are looking for the most. Lastly, storytelling remains a challenge for companies, a strong equity story is not just a good narrative, but a data-driven, relevant, and credible story that builds investor trust. That is why the company needs a reliable and experienced IPO underwriter.

Building a Sustainable Equity Story

A strong equity story does not end at the IPO stage; the narrative must be continuous and reflect the company's journey and development over time. After the IPO, the company needs to continue to communicate its performance achievements, business developments, and fulfillment of the promises and prospects that were conveyed during the IPO. This consistent narrative not only maintains the trust of investors who have invested since the initial IPO, but also attracts new investors to keep the stock liquid and maintain the company's valuation.

Any changes in business strategy, industry trends, or corporate actions need to be communicated to investors to maintain their trust to the company's prospects. The narrative built since the IPO must be part of a long-term communication strategy to keep the equity story relevant. With consistency, good governance, and active Investor Relations (IR) function, the company can maintain market confidence as a long-term fundamental value in the capital market.

To build a strong and sustainable equity story, companies need a trusted partner who understands their specific needs. Mandiri Sekuritas has been a strategic partner and IPO underwriter with more than 25 years of experience for numerous companies in developing a strong, authentic, and sustainable equity story. More than just developing a business narrative, through a comprehensive approach, the Capital Market Team at Mandiri Sekuritas helps companies to build emotional appeal that is relevant to the character and market objectives, while ensuring that the message is conveyed to the right investors.

Create a strong and sustainable equity story with Mandiri Sekuritas. Contact us for further inquiries about equity stories or IPO preparations; corporate.communication@mandirisekuritas.co.id