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rating market consolidates as European agencies merge

September 2005

Two of the largest socially responsible investment rating agencies in continental Europe have merged.

Brussels-based Ethibel and Paris-based Vigeo have joined forces to create the Europe-wide Vigeo Group, which will be Europe's largest SRI rating agency, with a staff base of 56 including 25 analysts. The combined turnover of Vigeo and Ethibel last year was more than €4.04million ($4.9m, £2.7m), so the new group now accounts for a quarter of the market in continental Europe, which is thought to be worth €15m, with France in particular growing rapidly. SRI institutional assets there grew 138 per cent last year - though from a small base - to €2.8bn, according to Novethic.

Ethibel spokeswoman Helene Gerin told EP there was a need for consolidation in the sector. 'There are too many sources of information, so to strengthen the market it would be better to have only one or two providers rather than a large number with information spread all over the place,' she said. 'Too many actors does not serve the sector well. That was one of the reasons this merger took place.'

Last year the rating agency CoreRatings, which has offices in London, Madrid and Paris, was bought by Norway-based Det Norske Veritas (EP6, issue 6, p8). In 2002, the SRI research company Global Risk Management Services was bought by Fimilac, which owns Fitch, the international credit rating agency in 2002. GRM was then subsequently turned into CoreRatings.

Vigeo Group predicts further international consolidation, citing the recent sale in the US of the Investor Responsibility Research Centre. Institutional Shareholder Services, the world's largest provider of proxy voting and corporate governance services, paid $10m (£5.58m) for Washington DC-based IRRC, although the organization will live on in the form of an IRRC Institute for Corporate Responsibility, a think-tank that will plough any surpluses back into research.

Last month Vigeo and the French rating agency EthiFinance became the first rating agencies outside the UK to begin using the London Stock Exchange's Corporate Responsibility Exchange to collect data on the social, environmental and ethical performance of companies.

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