It is not every day that the two largest providers of risk management systems and portfolio analysis to the Asset Management industry merge.
Riskmetric’s revenue from risk sales is over $150 million and Barra’s revenue’s are about $200 million. The next largest supplier is Algorithmics which is owned by Fitch and has about $100 million in revenue. Thereafter the size of risk companies falls away although there are many competing companies. The problem for Asset Managers is that what they really want is a Risk Service and that means the supplier must provide the data as well. Barra and Riskmetrics have always done this (indeed StatPro does too - read more about our Risk Management solution here) but most participants do not. This means that the acquisition will give the combined entity a very strong position in the market.
I am not familiar with anti-trust law but I imagine that MSCI checked with both the US and EU authorities before they proceeded with their offer. Whether or not it breaches the anti-trust rules, it will cause some of their clients a pause for thought. Being in a position to abuse does not make you an abuser and if MSCI look to give their clients better value (more for less) I am sure that they will welcome this deal.
From StatPro’s point of view we are looking to broaden our market with our new on-line product StatPro Revolution which includes a risk management service from just $100 a month. Indeed, our view is that technology will change everything in Portfolio Analysis just like it is changing everything else. The older established companies move into ex-growth cash generation whilst the newer companies with the latest technology compete to be the top provider.
In the mean time, if there are any Risk specialists out there that want to move to pastures new, StatPro is looking to expand.