Scope buys Feri EuroRating, challenge to dominant Big 3
The Berlin-based rating agency Scope is buying FERI EuroRating Services as part of its strategy to establish itself as a European alternative to the big three US credit rating agencies. Neither party was willing to disclose the price paid, but deal should be effective on August 1st.
The combined group will will rate the credit quality of 59 sovereign states and 150 real estate markets in 30 countries, while Scope is absorbing one of the leading European research companies for fund ratings and fund selection. The group will have a European market share of less than 3%, compared to The Big 3 American agencies - Standard & Poor's, Moody's and Fitch Ratings - with a combined market share of 92%.
Scope said the acquisition would extend its service offerings by adding sovereign credit ratings, investment fund analysis and real estate research. “This acquisition is part of the overall strategy to establish Scope as the European alternative to the US rating agencies,” the company said.
The group will target three areas – Scope Ratings, responsible for all credit rating activities, Scope Analysis in charge of analysing investment funds, asset managers and investment markets, and Scope Investor Services offering individual system solutions to institutional investors to monitor and risk-manage their portfolios.
Scope's CEO Florian Schoeller said that Scope Group has invested more than €20m trying to gain traction as an alternative to the US rating agencies Standard & Poor's, Moody's and Fitch Ratings, and to achieve rolling 12-month revenue growth of more than 50%. The Big 3 American agencies have a combined market share of 92%.
“Our Group's strategic investments over the past few years are now paying off through high organic revenue growth, and we plan to pursue our policy of continuously investing in attractive growth areas and suitable add-on acquisitions”, said Schoeller.
Scope had sales in 2015 of €50m and wihile still loss-making, expects to break even this year on an EBITDA basis. The company is privately-held with a roster of prominent shareholders from across German industry.
FERI AG was originally set up in Bad Homburg outside Frankfurt in 1987 as a private wealth manager with close connections to the Quandt family, still the majority shareholder in Bavarian car maker BMW. It has been a fully-owned member of the Stuttgart-based MLP financial advisory group since 2011. After selling the EuroRatings Services AG division, it will concentrate on its core business of investment, it said.