MSCI to acquire RiskMetrics

The investment analysis company MSCI has agreed a deal to acquire RiskMetrics Group for $1.55 billion in cash and stock.

RiskMetrics and MSCI provide a suite of risk and investment analysis services to investors and financial institutions.

RiskMetrics is also known for its institutional shareholder services unit which provides proxy research and advises large shareholders on how to exercise their votes.

MSCI said the acquisition will result in the integration of RiskMetrics' risk advisory business with its MSCI Barra unit, which provides investment analysis and risk management tools to fund managers.

"The combination of MSCI's expertise in portfolio equity risk models and analytics and RiskMetrics' powerful multi-asset class risk management platform creates a comprehensive, best of breed portfolio risk management offering which will provide our clients with a seamless view of risk across the front and middle office," said Henry Fernandez, chairman and CEO of MSCI.

RiskMetrics has made significant inroads in the hedge fund business in recent years, establishing itself as one of the most widely used suppliers of position-based risk reporting services to hedge fund investors.

The company offers a free risk reporting service known as Hedge Platform Community which is used by over 200 hedge funds with combined assets under management of over $350 billion. Hedge Platform Community is also offered through a number of hedge fund administrators.

"The merger with MSCI will enable us to provide alternative investment managers with more data and analysis through our risk reporting services. We will also be able to offer investors equity portfolio tools and indices in addition to their hedge fund risk," said Ethan Berman, CEO of RiskMetrics Group.

The deal is expected to close in the third quarter of 2010.