Private equity titans Carlyle Group and Warburg Pincus announced on Monday, December 22nd that they had acquired DBRS Ltd, a smaller credit rating agency, along with a consortium of Canadian investors including the founder of the company. The terms of the deal were not made public.The deal projected to close by April 30, 2015.
DBRS was advised by both Perella Weinberg Partners as financial advisers and Torys LLP as legal counsel. CIBC World Markets Inc. was employed as a financial adviser and Wachtell, Lipton, Rosen & Katz and Stikeman Elliott LLP were chosen as legal counsel by Carlyle and Warburg Pincus.
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Details on the DBRS deal
Of note, this deal is the second in the credit rating industry this month, after iconic publisher Hearst Corp announced earlier it was increasing its stake in Fitch Ratings to 80% from 50%. That deal, also expected to be finalized in the first quarter of next year, was valued at a little over $2 billion.
Carlyle noted it plans to fund its share of the deal through its Carlyle Global Financial Services Partners II fund, while Warburg Pincus‘ funds will be drawn from from Warburg Pincus Private Equity XI, L.P.
Also of note, DBRS founder and major shareholder Walter Schroeder still holds a significant stake in the firm, the companies highlighted in their statement on Monday.
The firm analyzes and rates debt of companies, local authorities and countries, as well as structured finance products (derivatives) such as commercial mortgage-backed securities.
DBRS currrently has around a 2% share of the ratings market dominated by McGraw Hill Financial Inc-owned Standard & Poor’s Financial Services, Moody’s Corp and Fitch Ratings.
Statement from Carlyle
“The world needs more global ratings franchises that issuers and investors alike can count on to provide timely and insightful ratings on a consistent and impartial basis,” noted Olivier Sarkozy, managing director of Carlyle Group, in explaining the acquisition.