German Exchange Deutsche Börse Buys Influential Proxy Advisor ISS
Posted on 11/17/2020
Proxy advisory firm Institutional Shareholder Services (ISS) found a new home at Deutsche Börse AG. Genstar Capital LLC sold a majority 80% stake of ISS to Deutsche Börse, valuing the ISS at US$ 2.275 billion (1.925 billion euros). Genstar Capital and current management will continue to hold a stake of approximately 20%. The transaction is expected to close in the first half of 2021 subject to customary closing conditions and regulatory approvals. Current CEO Gary Retelny continues to lead ISS and co-invest in the transaction. ISS was founded in 1985.
In 2020, ISS is expected to generate net revenue of more than US$ 280 million and an adjusted EBITDA margin of approximately 35% pre-transaction effects.
Deutsche Börse is making a play for ESG data and analytics by buying ISS. ISS has more than 4,000 clients. This transaction is the logical next step in Deutsche Börse’s pre-trade growth strategy. This deal complements last year’s creation of Qontigo, formed from the combination of the analytics capabilities of Axioma with Deutsche Börse’s existing STOXX and DAX index businesses. Furthermore, Deutsche Börse is getting a major leg in the proxy advisory business, which advises how institutional investors should vote in certain measures. According to its website, ISS claims to produce more than 42,000 proxy analyses each year in 115 global capital markets. ISS’ main competitor is proxy advisory firm Glass Lewis, as both firms have created a model of what good corporate governance is.
In October 27, 2017, Vestar Capital Partners sold ISS at a valuation of US$ 720 million to Genstar Capital. Vestar acquired ISS in April 2014, carving it out from its former corporate parent MSCI Inc.
