Briefly: “RiskMetrics buying Innovest” and more of Friday’s news

Two of the world’s leading providers of environmental, social and governance (ESG) research and analysis are joining forces. RiskMetrics Group has announced plans to acquire Innovest Strategic Value Advisors. Both firms are headquartered in New York, though Innovest also has a Toronto office.

The acquisition of Innovest and its team of experts, led by co-founders Dr. Matthew Kiernan and Hewson Baltzell, enlarges RiskMetrics’ footprint in the environmental, social and governance research space at a time when the financial community’s interests in sustainability are growing, the two companies said in a joint news release issued on Thursday.

“A myriad of long-term sustainability factors, particularly around climate change, are playing an increasingly important role in the way funds invest and view their portfolio risk,” said Ethan Berman, CEO of RiskMetrics Group. “Innovest is one of the few firms that have successfully taken a quantitative approach to assessing ESG issues, thereby helping investors view what are typically intangible, compliance-oriented issues through a clearer financial lens.”

RiskMetrics provides ESG research, data feeds and portfolio screening tools to global institutions that have a need to comply with clients’ investment mandates. With the acquisition of Innovest, clients will have access to an ESG analyst team of more than 50 research professionals.

“It would be an understatement to say that today’s turbulent market environment is placing an unprecedented premium on understanding the entire spectrum of investment risks — both traditional and non-traditional,” said Kiernan, founder and chief executive of Innovest. “By combining Innovest’s ESG research with RiskMetrics’ leading capabilities in risk management and corporate governance, we can help investors make more informed decisions.”

Innovest had $7.0 million of revenues in 2008 and is expected to contribute in excess of $2 million of adjusted EBITDA to RiskMetrics. The transaction is expected to close on March 2, 2009, pending the usual regulatory approvals.

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Northern Rivers restructures funds

Northern Rivers Capital Management is seeking unitholder approval for a plan to transfer its Monthly Income and Capital Appreciation Fund and Monthly Income and Capital Appreciation Trust Pool to Mavrix Fund Management.

Upon approval, the Monthly Income Fund’s name will be changed to the Mavrix Tax Deferred Income Fund. Toronto-based Mavrix is perhaps best known for its flow-through share-limited partnerships.

Cassels Investment Management will continue to manage both funds.

“We are excited about our new relationship with Mavrix and look forward to the opportunity of working with their marketing team and the large network of advisors supporting their funds,” said Rob Cassels, president and chief investment officer.

“The fund’s sophisticated structure will benefit from greater economies of scale,” said Robyn Graham, Northern Rivers vice-president, sales and marketing. “Cost synergies and broader exposure with the Mavrix family of funds will allow the fund to thrive going forward, and we’re confident unitholders will be best served by this decision.”

At the same time, Northern Rivers is seeking approval for a plan to merge its Evolution Fund into its Conservative Growth Fund, citing the small size of the Evolution Fund, which currently has less than $2 million in assets under management. The Conservative Growth fund manages just $2.2 million.

Effective February 23, 2009, the Evolution Fund will be closed to new subscriptions.

Both proposals have already been approved by Northern Rivers’ independent review committee.

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MFDA puts the brakes on duo’s outside business activities

A Hearing Panel of the MFDA has issued its decision in the case of Gerard Brake and Mavis Brake, permanently banning the pair from conducting securities-related business.

The Brakes were fined $1,229,660 for a variety of infractions, including:

• failing to disclose that they were conducting outside business activities;

• conducting off-book transactions, selling more than $1 million in shares of corporations that they owned and operated to 24 clients;

• failing to disclose the above conflict of interest to either their clients or their member firm; and

• having solicited and accepted the money, failing to return or otherwise account for it;

Mavis Brake was fined an additional $75,000 for failing to fulfill her obligations as a branch manager by intentionally concealing the above conduct from the member firm.

They were each fined $50,000 for refusing to produce documents and records when requested by the MFDA.

They were also each charged another $10,000 in costs.

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ING Canada now independent

ING Canada Inc. has completed its previously announced private placement, through which a number of institutional investors bought 36.2 million shares in the company from its Dutch parent company, ING Insurance International B.V.

The private placement raised $904 million, while the company also completed a bought deal secondary offering for an additional 47.8 million shares for approximately $1.26 billion.

ING Groep, the parent of ING Insurance International, no longer owns any shares in the Canadian company. The transaction makes Canada’s largest provider of property and casualty insurance a widely held Canadian company.

“By becoming a truly Canadian and independent organization,” said Charles Brindamour, president and CEO of ING Canada, “we have the unique opportunity to market a new brand that will reinforce our customer orientation.”

With a market cap of over $3.4 billion, the company qualifies for inclusion in the S&P/TSX 60 index.

“For the first time in recent history, a Canadian-listed and widely held company will assume the leadership position of the home, auto and business insurance industry in the country,” said Brindamour.

“The company, with its 6,700 employees, now has the complete flexibility to build upon its industry leadership, scale, expertise and strong financial position to pursue its core strategies and the growth opportunities that may arise as a result of the current market conditions.”

(02/20/09)