ISS buys ESG research house Oekom in latest acquisition

Institutional Shareholder Services bags sixth ESG company ahead of IPO

Institutional Shareholder Services (ISS) has made another acquisition in the responsible investment space, today announcing it has bought Munich-based ESG research house oekom for an undisclosed sum.
The newly-acquired entity will be called ISS-oekom to reflect “the strength of both brands”, ISS said in a statement. It confirmed that Oekom’s co-founder Robert Haßler would remain in charge of the research unit, which will retain its five offices and 110 staff as part of the deal.
Oekom has its roots in church investing in Europe, but now advises financial institutions with more than €1.5trn in assets under management. It rates companies’ environmental, social and governance performance; creates investment universes; provides research; does carbon risk analysis on portfolios; performs ‘second-party reviews’ on green bonds; and offers engagement services.
This is the latest in a string of acquisitions by Maryland-based ISS over the past few years, as it seeks to ramp up its sustainability and governance offering.
The firm was bought itself in September by mid-market private equity firm Genstar Capital, in a deal worth $720m. It was sold by Vestar Capital, which had bought it from MSCI in 2014.
By this point, ISS had already plumped itself up with four acquisitions: Sweden’s Ethix SRI Advisors, BlackRock-backed governance start-up iiWisdom, US ESG specialist IW Financial and Switzerland-based climate consultancy South Pole Group, in 2015, 2016 and 2017, respectively.Speaking in November, ISS President and CEO, Gary Retelny, told RI that its own slew of acquisitions was part of a potential Initial Public Offering (IPO), which it planned within “18 to 36 months”.
He told RI that any IPO would partly depend on “how successful we are in both buying and integrating, appropriately, acquisitions”, adding that the viability of any acquisition would be heavily influenced by “soft issues” such as the “ability to integrate people” into its business.
The shopping spree has continued in 2018, with the purchase last month of US business intelligence firm EVA Dimensions for an undisclosed sum.
Retelny said the acquisition of oekom “underscores our continued commitment to achieving our mission of empowering investors to effectively manage governance, environmental, and social investment opportunities and risks to realise long-term value”.
The deal reflects a broader trend in the ESG data and research market, which is becoming increasingly consolidated. Last July, investment research giant Morningstar upped its stake in Sustainalytics. In 2016, S&P Dow Jones Indices bought environmental data firm Trucost for £14m. RI understands there are more than ten other mainstream players looking for acquisitions in the space to meet growing investor demand for ESG expertise.