GLOBAL - Proxy voting agency Institutional Shareholder Services (ISS), globally the largest adviser to pension and mutual funds on casting shareholder votes, is to be sold for $553m (€434m) to RiskMetrics.
The US-based financial risk management firm, owned by private equity groups and employees, announced the move on Wednesday.
The deal will see the proxy company, mainly owned by Hermes, the investment manager owned by BT Pension Fund, and private equity group Warbug Pincus, being sold for more than 10 times the price paid for it five years ago.
The sale is most likely to be completed by the end of this year, according to "sources close to the company", reports stated.
The combine firms expect to generate over $200m in revenue per year. John Connolly, president and chief executive officer, will remain in his position, also taking a place on the RiskMetrics board.
The move is part of the group's broader strategy to expand beyond financial risk management.
With ISS, which will operate as a separate but wholly owned subsidiary of the firm, RiskMetrics can offer investors more products and a better understanding of their risk, the firm said.
"The combination of the two complementary businesses will address the growing demand among investors for comprehensive data, analytics and guidance which is critical to the investment process," according to the firm.
Exceeding earlier estimates that the firm would be acquired for between $400m and $500m, the firm was only in 2001 for $45m by financial services data provider Thomson Financial.
Credit Suisse advised ISS in connection with the transaction, in September the firm was distributing offer books to at least five potential bidders, including private equity firms.
"Both RiskMetrics and ISS have built traditions of trust with their clients through a combination of integrity, independence, thought leaders hip and a commitment to transparency," said Hermes chief executive officer Mark Anson.
On its website the group's chief executive officer Ethan Berman writes: "We welcome ISS, its employees and clients to RiskMetrics Group. And the insight and experience you bring."