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 December 01, 2006 A Rich Sale for ISSPROXY ADVISORY GIANT Institutional
Shareholder Services, on the block for just a couple of months, has
been bought. The lucky new owner is RiskMetrics Group, a closely held
New York risk-management firm spun off from JPMorgan. The two firms'
private investors are calculating that together, they will add up to a
successful initial public offering some day.
ISS had been owned by an investor group including Warburg Pincus and Hermes Pensions Management. The price was $553 million, a stunning increase from the $45 million that the group spent to acquire ISS from Thomson in 2001.
ISS CEO John Connolly retains his post and gains a RiskMetrics board seat. His new parent company helps investment banks, pension funds and hedge funds assess the financial risks in their portfolios, e.g. from currency or interest rate fluctuations. The two companies thus serve a nearly identical clientele.
"RiskMetrics' purchase of ISS allays concerns that a new owner could influence the independent firm's voting policies or sway proxy voting recommendations," said Connolly. But some observers worry that the deal will strengthen ISS's already powerful grip on governance advice.
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