ISS acquired by private equity firm

Vestar Capital Partners will acquire Institutional Shareholder Services from MSCI for $364 million, according to a joint statement from the private equity firm and MSCI.

ISS management will join with Vestar in buying the company. The percent of the company ISS management will own was not disclosed.

No other groups are participating in the deal. The transaction is all cash, and is expected to close by the end of June.

According to the joint press release, ISS will operate independently once the transaction is completed, and the current ISS executive team will remain in place.

ISS, which provides proxy-voting and corporate governance advisory services, has 1,700 clients, including pension funds and other institutional investors, and has employees operating across 15 global offices in 10 countries. It currently maintains the highest market share of proxy advisory services to fund managers and pension funds in Australia and globally.

In 2013, ISS accounted for 11.8% of MSCI’s $1.035 billion in revenue and 4% of its $371 million in operating income, according to its US 10-K report.

MSCI acquired ISS in 2010 as part of its acquisition of RiskMetrics Group. While it provided good cash flow, it was not a strategic fit with the rest of the MSCI business, and it was difficult to reconcile a proxy and governance advisory firm being owned by a listed company that itself had a history of poor governance ratings.

© Guerdon Associates 2024
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