MSCI Inc. announced it is acquiring IPD Group Ltd., a London-based real-estate research provider for $125 million. The transaction confirms the low multiples being fetched by research properties.
IPD Group (originally Investment Property Databank) collects real estate data from 32 markets globally, including property values, rental income, and performance data on real estate funds. The firm also offers portfolio valuation analytics and real estate indices, making it a great strategic fit for MSCI.
For MSCI, IPD extends their asset coverage from equities and fixed income to real estate.
Despite the high strategic value of the acquisition, the $125 million purchase price represents a 2.6x multiple on IPD’s $47.7 million (£29.7 million) revenues last year. IPD revenues were $26.4 million (£16.7 million) through June, implying a 2.4x multiple on annualized 2012 revenues.
As we noted last year, gone are the days when multiples for research properties averaged over 3x revenues. MSCI paid 5.2x in its $1.55 billion acquisition of Riskmetrics in March 2010, but that was largely driven by the fact that Riskmetrics was publicly traded at the time of the acquisition. More representative was ITG’s acquisition of Majestic research in October 2010 for 2.2x revenues.
The full MSCI press release can be viewed here.