RiskMetrics IPO Sits In The Sweet Spot (RMG)

RiskMetrics Group, Inc. (NYSE: RMG) priced its long-awaited IPO of 14 million shares at $17.50 per share.  This was actually at the low-end of the $17 to $19 range, and you can probably blame the recent three weeks of the stock market for that.

This one was in the pending category for long enough that you might have put it in the category of "will it come public?" if you considered the current state of the stock market.  But what is interesting here is that the timing of this IPO actually could not have been better.  Here is why:

• RiskMetrics is a provider of risk management and corporate governance products and services to participants in the global financial markets to help clients better understand and manage the risks associated with their financial holdings, provide greater transparency to their internal and external constituencies, satisfy regulatory and reporting requirements and make more informed investment decisions. It sells solutions across multiple asset classes to asset managers, hedge funds, pension funds, banks, insurance companies, financial advisors and corporations.  Yes…. the entire group that hasn’t done anywhere enough to quantify their internal risk.

After about 30 minutes this has already traded over 4.5 million shares and was trading at $21.22.  So far its daily trading range is $20.23 to $23.10.  The underwriters were also listed as Credit Suisse, Goldman Sachs and Banc of America.

When you have potential blow-ups all over Wall Street from major and minor financial firms, this company is in the sweet spot and probably will continue to be there for quite some time.  Buzzwords like counterparty risk, CDO exposure, mortgage defaults, credit default, risk exposure, and the like are all actually music to RiskMetrics’ ears.  One man’s pain is another man’s pleasure.

Jon C. Ogg
January 25, 2008