INVESTING/PORTFOLIO STRATEGIES

MSCI buying GMI Ratings to integrate ESG and accounting research

MSCI Inc. will acquire GMI Ratings for $15 million in cash under a definitive agreement between the two companies, they announced Friday.

The deal will integrate GMI's environmental, social, corporate governance and forensic accounting expertise into MSCI's ESG products, a statement from GMI Ratings said.

MSCI will make the acquisition of GMI Ratings, formally called Governance Holdings Inc., through its MSCI ESG Research Inc. unit. The deal is expected to close by the end of September.

Among other aspects, MSCI is boosting its corporate governance research after selling its Institutional Shareholder Services Inc. unit, which specializes in corporate governance research and proxy-voting recommendations, earlier this year for $364 million to Vestar Capital Partners and ISS management.

“ISS had a governance product built for proxy voting,” Dan Concannon, president and CEO of GMI Ratings, said in an interview. “We (at GMI Ratings) have a governance product built for investment decision-making,” offering in-depth research.

Remy Briand, MSCI managing director and head of ESG research, said in the GMI statement and an MSCI statement: “The addition of GMI's corporate governance research and ratings will enable MSCI to offer its clients a depth and quality of coverage across all three pillars of ESG research that will be unmatched in the marketplace. These tools are growing in importance as investors seek to understand more fully the risks in their portfolios.”

MSCI plans to retain GMI Ratings staff and GMI Ratings' main Portland, Maine, office while combining the firms' offices in New York, Washington and Los Angeles, Mr. Concannon said in the interview.

MSCI will retain the GMI Ratings brand for the short term and then re-evaluate whether to continue separate branding, Mr. Concannon added.

Leadership of the combined firms has yet to be determined, including his own role, Mr. Concannon said in the interview.

Kristin Meza, MSCI vice president, public relations and marketing communications, couldn't be reached for comment.

MSCI plans to retain GMI Ratings staff and GMI Ratings' main Portland, Maine, office while combining the firms' offices in New York, Washington and Los Angeles, Mr. Concannon said in the interview.

MSCI will retain the GMI Ratings brand for the short term and then re-evaluate whether to continue separate branding, Mr. Concannon added.

Leadership of the combined firms has yet to be determined, including his own role, Mr. Concannon said in the interview.

Kristin Meza, MSCI vice president, public relations and marketing communications, couldn't be reached for comment.