BUSINESS  |  JANUARY 23, 2010

RiskMetrics Puts Itself Up for Sale

By JEFFREY MCCRACKEN and PETER LATTMAN

RiskMetrics Group Inc. has put itself on the auction block, according to people familiar with the matter.

A number of media companies and private-equity firms have been contacted about a potential acquisition of the New York provider of risk analysis, financial research and corporate-governance services for investors such as pensions and hedge funds.

The company could fetch a premium of about 30% to its current value, said one person involved in a potential transaction. That would value the company, which has about 1,100 employees, all in New York, at around $1.3 billion, based on where its shares traded Friday. Still, a completed deal is far from certain, and like any auction, bidders may not offer enough to persuade it to sell.

Among those considering a bid is MSCI Inc., a former Morgan Stanley unit that specializes in building market indexes, these people said. Other interested parties include media companies such as Bloomberg, McGraw-Hill Cos. and Thomson Reuters.

A spokeswoman for RiskMetrics didn't respond to requests for comment. Spokesmen for MSCI, McGraw-Hill and Thomson Reuters declined to comment. A Bloomberg spokeswoman didn't provide comment.

Evercore Partners is handling the sale, said the people familiar with the matter.

Many of the firms looking at RiskMetrics may also be weighing bids for Interactive Data Corp., a financial-market-data analysis firm partially owned by Pearson PLC, owner of the Financial Times.

IDC, with an stock-market valuation of $2.8 billion, would be a larger deal. The company announced this past week that its board is undertaking a preliminary review of strategic alternatives for the company.

With their relatively stable subscription-based businesses, these companies also appeal to private-equity firms, which could be bidders for either. Potential bidders include Kohlberg Kravis Roberts & Co. and Carlyle Group. Roughly 92% of RiskMetrics revenue, estimated at $300 million in 2009, are recurring.

RiskMetrics already has private-equity involvement. Three firms—General Atlantic, Spectrum Equity and Technology Crossover Ventures—together control about 46% of the company, having invested $122 million in the business in 2004.

The company was founded in 1994 as a portfolio-risk analysis unit inside J.P. Morgan Chase & Co. and was split off in 1998. The company has grown via acquisition, most notably with the acquisition of corporate-governance firm Institutional Shareholders Services in January 2007 for about $550 million.

That unit often weighs in on proxy battles and can tip the balance in close elections or hostile takeovers where a target is battling outside shareholders or an unfriendly acquirer.

RiskMetrics went public in early 2008. In New York Stock Exchange trading Friday, RiskMetrics rose $1.55, or 10%, to $17.07, putting its market value above $1 billion. RiskMetrics' shares peaked at $25.50 in 2008.

Write to Jeffrey McCracken at jeff.mccracken@wsj.com and Peter Lattman at peter.lattman@wsj.com