Saturday, January 26, 2008

Societe Generale's meltdown works in RiskMetrics IPO's favor

(Blogging Stocks) With the turbulence in the markets, it was looking dicey for the RiskMetrics Group (NYSE: RMG) IPO. The company even priced its offering at $17.50, at the low end of its proposed $17-$19 range.

But RMG turned out to be a good deal for investors. RiskMetrics' stock price is now trading at about $23.

The company is the brainchild of JPMorgan (NYSE: JPM), which wanted to develop better ways to deal with risk. After all, the financial markets have become increasingly complicated – especially with the surge in derivatives.

To bulk things up, RiskMetrics purchased ISS, which provides research and voting services for corporate governance.

The upshot: RiskMetrics has about 3,500 customers. Revenues increased about 16% to $176 million for the first nine months of 2007.

However, perhaps the biggest boost for RiskMetrics came from announcement that Societe Generale lost $7.1 billion, which was the result of a nefarious trader. No doubt, the firm could have used some better risk management systems, huh?

The underwriters on the RiskMetrics IPO included Credit Suisse, Goldman Sachs and Banc of America Securities LLC.

You can find the prospectus at the SEC website. Also, if you want to check out other recent IPO activity, visit

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