Do you believe the Investment Property Databank has found a safe home at MSCI? Yes, if you believe the future of the 300-strong organisation founded in 1986 by Rupert Nabarro and Ian Cullen needs charging up in order to become the global benchmarking business for real estate. No, if you believe the 2,300-strong US listed company will dilute the collegiate culture as it sweats IPD to recover the £78m purchase price. MS does stand for Morgan Stanley, after all.
Nabarro and Cullen are now in their late 60s. In 2005, they saw off an attempt to take control by Robert Maxwell’s son, Kevin, backed by Elliott Bernerd of Chelsfield. The funds, property companies and agents who owned half the shares backed the management. The constitution was reframed, making takeover impossible. Even so, a future without its founding fathers loomed.
In early 2012, the external shareholders – including Chelsfield – concluded the only way to secure the long-term future was to select a safe pair of hands and sell 100% of the equity. For two reasons: to safeguard the future of the highly experienced staff, and to promote the IPD service to a worldwide audience and so enhance real estate as a grown-up asset class in countries where opacity rather than transparency is the norm.
At this point I had better declare an interest. In March 2012, Rupert Nabarro asked if I would act as a consultant on the sale. This is the point where a journalist is supposed to run a mile. How could I report the story? Well, I couldn’t, obviously. But I could not resist the temptation of being an insider, just this once. Many a fascinating hour was spent in the meeting rooms at Lazard. But that interest is now at an end. So, here is the story of IPD.
In September 1983, Christopher Jonas put a proposition to Rupert Nabarro over lunch at Luigi’s in Covent Garden. The senior partner of Drivers Jonas asked the 38-year-old planner from Roger Tym & Partners, if he would like to leave and set up a real estate research business independent of those long established by larger agencies, such as Jones Lang Wootton, Richard Ellis and Healey & Baker.
“Asking Rupert to leave Roger Tym was partially self-interest,” says Jonas, who left the family firm in 1995 to pursue manifold other interests, including advising Railtrack and Canary Wharf. “Each time we came to do a deal we would find the bigger firms had reams of data. But, more to the point, it was important that we all stopped arguing over the data and concentrated on interpretation.”
The rest is fairly well known. The smaller agents backed IPD. The bigger ones struggled against the idea of an independent data source. They still do a bit. But clients gave IPD the “gold dust” source data. “The culmination was the real estate market growing up,” says Jonas. “IPD may be home-grown and a bit idiosyncratic, but the global market takes its data very seriously.”
In October 2011, Jonas asked Nabarro to lunch again. The conversation? Not sure. What is sure is that Nabarro had been worrying about the succession at IPD since at least 2005. The property industry shareholders were worried for a slightly different reason. The IPD indices have helped establish property as a grown-up asset class. No IPD, no indices.
Jonas suggested selling. One year on, the deal was done. A whizz round the MSCI website is enough to convince anyone that these guys know their indexing onions. They offer “indices, portfolio risk and performance analytics from internationally recognised brands such as Barra, RiskMetrics and ISS”. Don’t worry. No doubt bankers and fund managers recognise these names.
MSCI will, of course, want to get a return on its investment. The NYSE-listed company born out of Morgan Stanley will be steelier in price negotiations. It will shake the company up. There remains a danger it will shake too hard and break a collegiate culture responsible for forging such close ties with customers. But, in all, IPD seems to have sold itself to a corporate version of itself. Which will be no bad thing, depending on your point of view.
