Parthenon Capital, a Boston-headquartered private equity firm, has bought a majority stake in KBRA for around $900 million.
The deal has been in the works since August and officially closed on Friday. Parthenon bought a majority ownership from Wharf Street, KBRA’s owner since 2015, according to Kate Kennedy, senior managing director of business development at KBRA. The acquisition, she said, will allow for KBRA’s future global growth. The company will continue to operate under the KBRA name, she said.
Parthenon Capital "looks to partner with us and allow us to continue to provide unparalleled service combined with exceptional analysis and thoughtful research,” Kennedy said.
“When [Kroll] was founded, our mission was to provide the market with timely, valuable, and transparent ratings and research,” said Jim Nadler, Kroll CEO, president and cofounder.
It is rare for a rating agency to be acquired, according to Tom Kozlik, head of municipal research and analytics at HilltopSecurities. “It can happen,” he said. “But size is often a reason the larger firms are not acquisition targets themselves.”
Larger rating firms, like Moody’s, S&P Global and Fitch Ratings, have mostly been acquiring businesses themselves to bolster their product and services offerings, much of which are technology- and environmental, social, and governance-focused, he said.
The rating agencies have been busy bolstering their municipal-related businesses in recent years, Kozlik said, and said moving forward, rating agencies will continue to focus on evolving with technology and topics related to ESG and cyber issues.
Kroll employs over 400 people across five offices in the United States and Europe. Since its launch in 2010, the business has provided over 51,000 ratings totaling approximately $3 trillion in rated issuance.
Within the public finance space, Kroll has rated over $390 billion in debt and its average rated size transaction is approximately $325 million, nearly 10 times the size of the average municipal issuance. The company rates a third of the issuers in the top 25% of largest issuers ranked by outstanding debt.
“[Kroll’s] strong culture valuing integrity, ratings quality and customer service positions the firm for continued growth and success,” said Brian Golson, co-CEO of Parthenon Capital. “We look forward to partnering with [its] passionate team to support their next chapter.”
