MSCI enters real-estate investment benchmarking with IPD buy

Wed Oct 31, 2012 6:52am EDT

Oct 31 (Reuters) - Investment analysis and market index company MSCI Inc said it will buy IPD Group Limited for $125 million to enter into the real-estate investment benchmarking business.

IPD Group Limited is the holding company for the IPD Group, a real estate information business.

The deal, which will be funded through existing cash, is not expected to have a material impact on MSCI's earnings.

Vanguard Group, the largest U.S. mutual fund manager, said earlier this month it was switching 22 of its biggest index funds away from benchmarks provided by MSCI in order to cut costs.

Investors feared that BlackRock, the top exchange traded fund (ETF) manager and MSCI's single biggest licensing customer, would use Vanguard's exit as a leverage to demand lower fees.

However, later in the month, BlackRock announced it was cutting fees on just a handful of exchange-traded funds and none tracking MSCI benchmarks.

MSCI has grown rapidly, thanks to licensing fees paid by ETF fund managers, like BlackRock and Vanguard. The fund companies pay MSCI to track its indexes at rates calculated as a small percentage of each fund's assets.

The company's shares, which touched a three-year low earlier this month on Vanguard's exit, closed at $27.54 on Friday on the New York Stock Exchange. Major U.S. stock markets were closed on Monday and Tuesday due to Hurricane Sandy.

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