MSCI, the indices and data analytics provider, has agreed to pay $190m to acquire a minority stake in Burgiss Group, a specialist private asset data provider, in a deal that reflects the growing importance of alternative investments in the portfolios of pension funds and other institutional investors.
Burgiss offers performance data covering close to 10,000 private investment vehicles that hold around $7tn in private equity, private real estate, private debt, infrastructure and natural resource funds.
The deal will strengthen MSCI’s existing capabilities which are focused on public equity and bond indices, environmental, social and governance (ESG) research and ratings as well as portfolio performance and risk analytics.
Henry Fernandez, chief executive of MSCI, said he expected to see “a revolution in private capital investing over the next decade” as growing numbers of investors adopted illiquid alternative investments to boost returns.
“The willingness of investors to expand their private asset portfolios will depend on new methods and tools that help them better understand the characteristics of these investments, their valuations, the impact of leverage and liquidity and the drivers of performance and risk,” said Mr Fernandez.
His ambition is to build MSCI into the Microsoft of the investment industry by providing asset managers with the tools and services they need to run sophisticated portfolios.
“Through this strategic relationship, MSCI and Burgiss will help investors in private assets around the world to solve critical problems and develop greater understanding of their total portfolios,” added Mr Fernandez.
A former diplomat in the Nicaraguan embassy in Washington, Mr Fernandez has overseen MSCI’s rise into an important player across capital markets globally. Deals have been a key to his expansion strategy, such as the acquisitions of Barra, the analytics company founded by the fabled quantitative investor Barr Rosenberg, and JPMorgan’s RiskMetrics, the developer of the widely used “value-at-risk” metric, in 2004 and 2010 respectively.
In September, MSCI acquired Carbon Delta, a Zurich-based boutique focused on climate-change scenarios analysis. It also has the firepower to pursue additional deals that complement its existing ESG analytical capabilities.
These deals also bring MSCI into more direct competition with one of its most important clients, BlackRock. The world’s largest asset manager paid $1.3bn last year to acquire eFront, a provider of private market analytics. BlackRock has integrated eFront into its existing Aladdin technology platform which also offers a wide range of sophisticated risk and portfolio management services.