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MSCI's Purchase of Real Capital Analytics Has Strategic Merit; Deal Pricey but Should Be Accretive

Rajiv Bhatia, CFA Equity Analyst

Analyst Note

| Rajiv Bhatia, CFA |

MSCI announced on Aug. 2 that it will acquire Real Capital Analytics for $950 million. The all-cash deal will be paid for by MSCI's cash on hand, which totaled nearly $2.0 billion at the end of the second quarter. The deal will enhance the firm's offering in the all other private assets segment. In January 2020, MSCI acquired 40% of Burgiss; this deal represents a continuation of investing in its relatively small real estate business. We will maintain our wide moat rating and fair value estimate of $313 per share; we currently regard the shares of MSCI as overvalued.

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Company Profile

Business Description

MSCI describes its mission as enabling investors to build better portfolios for a better world. MSCI's largest and most profitable segment is its index segment, where it provides benchmarking to asset managers and asset owners. In addition, it boasts over $1 trillion in ETF assets linked to MSCI indexes. The MSCI Analytics segment provides portfolio management and risk management analytics software to asset managers and asset owners. MSCI's All Other segment which comprises about 10% of revenue will be broken out into ESG and climate and private assets segments in 2021. In ESG and climate, MSCI provides ESG data to the investment industry. In the private asset side, MSCI provides real restate reporting, market data, benchmarking, and analytics to investors and real estate managers.

250 Greenwich Street, 49th Floor, 7 World Trade Center
New York, NY, 10007
T +1 212 804-3900
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 3,910