RiskMetrics Group will acquire Innovest Strategic Value Advisors, an environmental and social research company, for about $16 million in cash, RiskMetrics announced today.
RiskMetrics, a risk management and corporate governance research advisory company, plans to combine its own environmental and social research and portfolio screening services with Innovest to create the largest concern in that specialized industry, Hewson Baltzell, Innovest president and co-founder, said in an interview. It will operate under the RiskMetrics name.
We will be the biggest firm in the ESG space and intend to leverage off RiskMetricss sales force and marketing and (information technology) space, Mr. Baltzell said.
Innovest specialized in identifying non-traditonal sources of corporate risk and return to provide research for social investors as well as seeking to make in-roads with mainstream investors, Mr. Baltzell said. It analyzes and rates more than 2,300 companies worldwide, he added.
Among its services, Innovest has investment subadvisory relationships in which it provides its portfolio screening research to investment advisers for environmental, social and other sustainable investment funds, whose assets total $1.4 billion. Innovest receives part of the investment management fee.
RiskMetrics has no such subadvisory relationships. It plans to keep the Innovest relationships.
Mr. Baltzell and Matthew J. Kiernan, Innovest CEO and co-founder, will head the combined business for RiskMetrics, Mr. Baltzell said. Their RiskMetrics titles havent been determined, he said. They will report to Steve Harvey, current head of RiskMetrics governance who also heads its envionmental and social research, and to Ethan Berman, RiskMetrics CEO, said Sarah Cohn, RiskMetrics spokeswoman.
Most of the RiskMetrics work force in the segment and the Innovest employees will stay on at the new combined entity, although some employees of both firms will be terminated, Mr. Baltzell said. The preacquisition staffing of the segments totals 116, Ms. Cohn said.
The number of layoffs werent available from Mr. Baltzell or Ms. Cohn. In total, the combined resarch analysis team will have 50 employees, a RiskMetrics statement said.
State Street Global Alliance a joint venture of SSgA and the €195 billion ($244 billion) Stichting Pensioenfonds ABP, Heerlen, Netherlands, to buy interest in innovative investment companies owns 25% of the Innovest, while the rest of Innovest is owned by its management and other employees, Mr. Baltzell said.
The transaction is expected to close March 2.