IPD closes in on sale to MSCI (updated)

IPD, the global property performance measurement, benchmarking and index provider, is nearing a sale to MSCI, the global equities and fixed income index provider, for around £82m, CoStar News can reveal.

A sale to MSCI could pave the way for the retirements of co-founders Rupert Nabarro and Ian Cullen.

IPD and MSCI issued a joint statement at 14:50 BST confirming advanced talks.

The statement said: “MSCI Inc, a leading provider of investment decision support tools worldwide, and IPD Group Limited confirmed today that they are engaged in exclusive advanced discussions regarding MSCI’s potential acquisition of IPD.

“There can be no assurances that any agreement will be reached or that a transaction will be completed.

“We will have no further comment until an agreement is reached or the discussions are terminated.”

CoStar News understands MSCI has beaten off competition from underbidders Euromoney Institutional Investor, which is 67.4%-owned by Daily Mail and General Trust, according to its 2011 annual report, and Reed Elsevier, the owner of a series of business-to-business titles including Estates Gazette and EGi, Farmers Weekly and New Scientist.

The sales process is being managed by investment bank Lazards, which approached a wider pool of indices, data and media companies to also bid for IPD, including Bloomberg and McGraw Hill, the owner of ratings agency Standard & Poor’s.

The £82m price tag reflects more than £3,000 per share, for IPD’s shareholder base which includes around a dozen institutional shareholders.

Nabarro, who founded the company with Cullen in 1985, is the single largest shareholder, while the majority of institutional shareholders own around 5% each. In total, IPD employees and directors now own more than 50% of the ordinary share capital of the company.

In October 2011, Invista sold its 5% stake to IPD directors and staff for £1.35m, at which discount the sale price would have valued IPD at £27m. An £82m sale would reflect a more than three-fold increase on the sale price achieved for Invista’s stake, an equivalent of £4.1m.

Nabarro and Cullen’s vision for IPD at the turn of the 1980s was to aggregate investors’ private commercial property data to build a valuation-based index to create a UK commercial property benchmark for participants and the wider market, comparable with what had long existed in equities and bond markets.

IPD expanded its operation internationally with an index first in the Netherlands in 1994, using an identical methodology, and underpinned by its core portfolio analysis service (PAS), which seeks to independently analyse the drivers of performance for property investor’s direct property portfolios relative to a universal or bespoke benchmark.

A wider expansion into Europe, Australasia, Asia Pacific and the United States followed over the subsequent two decades exporting its valuation-based index methodology along with broader business lines offering fund indices, portfolio analysis, market and academic-standard research, measurement services for occupiers, conferences and events as well as latterly, a new data service for property lending banks.

IPD’s direct property global database captured around 60,000 properties valued at nearly €2trn reflecting an estimated 24.8% of the world’s institutional real estate investments, according to the company’s 2011 annual report published this May.

IPD now has 32 valuation-based and fund indices in 25 countries, with 335 staff worldwide.

Last year, IPD’s pre-tax profit was £2.76m, an increase of 3.5% from 2010’s £2.67m. Profit after tax was £1.91m, an increase of 14.6% on 2010’s £1.67m.

IPD had revenues of approximately £30.5m for the 12-month period ending 30 June 2012. Sales revenue rose by 8.8% to £29.7m last year, from £27.3m in 2010. In the UK, IPD’s sales revenue grew by 8.9%, while continental European revenues were slower, driven by wider Eurozone macro problems, at just 2.5%.

jwallace@costar.co.uk