March 01, 2010
MSCI Will Acquire RiskMetrics
by Robert Kropp
Implications are uncertain for the ESG investment research industry, whose consolidation has been
driven in large part by acquisitions by RiskMetrics.
In a deal that is certain to have ramifications for the rapidly consolidating environmental,
social, and governance (ESG) investment research industry, MSCI, a provider of stock market indexes and risk and
performance analytics, has agreed to acquire RiskMetrics Group, a provider of risk management and
corporate governance products and services.
The $1.55 billion transaction is
expected to close in MSCI's third fiscal quarter of 2010.
During 2009, RiskMetrics
acquired highly regarded ESG research providers Innovest Strategic Value Advisors and KLD Research
& Analytics. Other major consolidations occurring last year in the ESG research space included the
merger of Jantzi Research and Sustainalytics, as well as the purchase
by Thomson Reuters of ASSET4. Yet another major development was the September 2009
entry into the ESG research field of financial information giant Bloomberg Professional.
Since its 2007 purchase of
Institutional Shareholder Services (ISS), RiskMetrics has also been a leading provider of proxy
Rumors surfaced last month that RiskMetrics had put itself up for sale.
The major contenders for the acquisition were expected to be MSCI, Bloomberg, and Thomson Reuters.
In a webcast aired this morning, Henry Fernandez, Chairman and CEO of MSCI, said, “One
example of revenue synergy comes in the environmental, social, and governance space that
RiskMetrics has been expanding on. We’re excited about the opportunity to leverage the research,
the analytics, and the data of RiskMetrics in its business to create new businesses that will
enable us to offer products for global socially conscious investors.”
Ethan Berman, Chief
Executive Officer of RiskMetrics, said, “The need to understand risk is critical, and is only going
to expand over the next ten years. Our clients are looking for their providers to bring them
broader, more complete solutions. Combining with MSCI allows us to provide tools for portfolio risk
management across all asset classes.”
MSCI expects to gain $50 million in cost synergies
by eliminating overlapping positions, relocating positions to emerging market centers in Monterrey,
Mexico, Budapest, and Mumbai, and savings in other company expenses.