MSCI To Sell Proxy Advisory Firm ISS To Vestar Capital Partners For $364 Mln

(RTTNews) - MSCI Inc. (MSCI), a provider of investment decision support tools, said Tuesday that it has agreed to sell proxy advisory firm Institutional Shareholder Services Inc. to private equity firm Vestar Capital Partners for $364 million in cash.

In late October 2013, MSCI had said it planned to explore strategic options for ISS. The unit comprises MSCI's Governance segment. The transaction is expected to close in the second quarter.

ISS is a provider of proxy advisory and corporate governance solutions to financial market participants. ISS' services include proxy research and analysis, end-to-end proxy voting and distribution solutions, turnkey securities class-action claims management, and governance data and modeling tools.

Henry Fernandez, Chairman and CEO of MSCI said, "The sale of ISS underscores MSCI's strong focus on and commitment to providing performance and risk investment products and services for every major asset class and for investors with multi-asset class portfolios."

MSCI said its Environmental, Social and Governance or ESG investment performance and risk products will continue to be an integral part of the company and will not be part of the sale.

In a separate statement, ISS said that it will operate independently on completion of the transaction and retain its current executive team.

Gary Retelny, President of ISS said, "Clients will continue to see expanded product offerings, innovative solutions, and the same high level of service that ISS has delivered to institutional investors, corporations, and governance practitioners globally for nearly three decades."

Robert Rosner, Founding Partner and Co-President of Vestar Capital Partners, said ISS' position in the industry, future prospects, and strong management team appealed significantly to the New York-based private equity firm.

MSCI acquired ISS in 2010 as part of its acquisition of RiskMetrics Group. ISS currently has nearly 700 employees operating across 15 offices in 10 countries. The unit's 1,700 clients include institutional investors as well as corporations focused on governance risk mitigation as a shareholder-value enhancing measure.

Vestar Capital Partners is a U.S. middle market private equity firm that specializes in management buyouts and growth capital investments. The company is targeting equity investments in the range of $50 million to $150 million in U.S. based middle-market companies with enterprise values ranging from $250 million to $1 billion.

Morgan Stanley acted as financial advisor to MSCI on the transaction, while Davis Polk & Wardwell LLP acted as its legal adviser. For Vestar Capital Partners, Simpson Thacher & Bartlett LLP served as legal advisor.

MSCI closed Monday's trading at $45.62, up $0.41 on a volume of 340,700 shares.