RiskMetrics Group today announced it is buying Institutional Shareholder Services Inc. (ISS)

ISS provides of proxy voting and corporate governance solutions to the institutional market. RiskMetrics is a financial risk management firm. The firms said that the merger reflects the broader vision of both companies to expand beyond their core businesses of financial risk management and corporate governance to offer a broad range of data, analytics and advice to investors.

All members of the RiskMetrics Group board and its three investors, Spectrum Equity Investors, General Atlantic, and Technology Crossover Ventures, backed the deal, which is expected to close by year-end or shortly thereafter.

Combined, RiskMetrics Group and ISS will generate over US$200 million in revenue per year with approximately 800 employees across 23 offices serving over 2400 clients worldwide. ISS will operate as a separate, wholly owned subsidiary of RiskMetrics Group with current president and CEO, John Connolly, remaining CEO and operations largely unchanged. Connolly will also join the RiskMetrics Group board. Credit Suisse advised ISS in connection with the transaction. Financial terms of the deal were not disclosed.

Spun-out of JP Morgan in September of 1998, RiskMetrics Group provides financial risk analytics to banks, central banks, hedge funds, asset managers, pension funds and corporations. Founded in 1985, Institutional Shareholder Services provides corporate governance research, proxy voting services and analytical databases.

“As financial markets become more important and complex, RiskMetrics Group is committed to providing expertise and leadership to all market participants,” said Ethan Berman, CEO of RiskMetrics. “The addition of ISS to RiskMetrics Group brings another important capability to that community.”

“The combination of ISS and RiskMetrics Group will deliver profoundly important benefits to our combined clients, to our combined staff and to the financial services industry as a whole,” said Connolly. “Both ISS and RiskMetrics have been tremendously successful on their own. Now, by bringing together our industry leading solutions, our respective areas of expertise and our acute understanding of institutional investors’ needs, we will be in a position to serve an even broader range of fiduciary and risk management requirements.”

“Corporate governance is now being recognized as a vital fiduciary responsibility,” said RiskMetrics Group board member, Arthur Levitt. “This merger will allow RiskMetrics Group to offer these services to increase shareholder value for more investors.”

“ISS was founded to help institutional shareholders mitigate risk and maximize return,” said ISS chairman, Robert Monks. “This transaction represents the expansion of that vision to a wider audience of financial stakeholders.”