UBS buys stake in alternative research firm

By Joseph A. Giannone and Jonathan Keehner

NEW YORK (Reuters) - Swiss bank UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) said on Thursday it bought a minority stake in research advisory firm Integrity Research Associates LLC, a deal that will let the bank offer clients access to more than 1,600 untraditional research providers worldwide.

Terms were not disclosed.

New York-based Integrity helps fund managers identify and then purchase research from various providers. The service, currently available in the United States, will be expanded to other regions with UBS backing. It has 19 employees in the United States and India.

"We thought Integrity was quite unique," UBS global equity research head Mark Steinert said in an interview, citing its detailed database of providers and methods for matching research firms with investors. "We saw that as a point of differentiation for us."

Traditional sell-side brokerage research -- crunching financial statements and interviewing executives to generate buy, hold and sell calls -- has been under regulatory and market pressure for years, and Wall Street banks have been cutting back on research coverage.

Now a whole industry of firms selling new forms of market intelligence has emerged to fill the void.

There are channel checkers who interview employees up and down the supply chain; expert networks made up of professionals working inside different industries; environmental research; and "deep search" firms that mine the Internet for data.

Business is growing as fund managers seek that elusive edge that helps them beat the market.