Institutional Shareholder Services sold for almost double 2014 price after move into broader ESG data

ISS, now more of a full service ESG house, is sold to Genstar Capital

Proxy firm ISS has been sold for almost double the amount paid for it just three years ago – a sign of the increasing value being attached to environmental, social and governance assets.

Private equity firm Genstar Capital, in partnership with ISS’s management, has announced it is acquiring ISS for $720m (€599.5m) from current owners Vestar Capital.

Vestar acquired the business for $364m in 2014 from MSCI, which had owned ISS since acquiring the RiskMetrics business for $1.55bn in 2010 – though it was never a core part of the deal for MSCI.

Eventually, MSCI offloaded ISS – founded by legendary governance figure Bob Monks in 1985 – to Vestar, three years ago.

Since then, ISS has worked to expand beyond its traditional proxy voting business, most recently adding the climate data arm of South Pole.It was the latest in a string of ESG acquisitions made by Maryland-based ISS over the past few years. It bought Sweden’s Ethix SRI Advisors in September 2015 and BlackRock-backed governance start-up iiWisdom in August 2016. In January this year, it bought IW Financial, a US firm offering ESG research.

ISS will continue to operate independently and the current ISS executive leadership team, headed by President and CEO Gary Retelny, will remain. The transaction is expected to close by early fourth quarter.

Retelny called Genstar the “right partner” for ISS, which has more than 1,000 staff in 13 countries. It has around 3,000 clients, including many leading institutional investors.

At Genstar, ISS will be a portfolio company alongside the likes of Strategic Insight (formerly Asset International) the asset management intelligence firm that owns the PlanSponsor, Chief Investment Officer and Global Custodian titles.