The acquisition will boost EU’s position in market dominated by 3 US Market rating agencies.
In a strategic development, two rating agencies in Germany who have a combined market share of less than 3%, are merging so as to increase their clout in the market that is dominated by three U.S. companies, which are Fitch, Moody’s and Standard & Poor.
Germany’s Scope has disclosed, without detailing the sum involved, that it is in the process of acquiring Feri Eurorating from MLP’s financial services. After the acquisition, its coverage will include sovereign ratings.
Founded in 2013, Scope is owned by a group of investors including many former managers from Germany’s various financial services.
In the last one year, Scope has grown by more than 50% and has it’s a turnover of $56 million (50 million euros) as of June 2016. Although it is still currently in the red, it hopes to break even this year, before interest, taxes, depreciation and amortization (EBDTA).
Half of its sales are derived from German clients, which includes corporates, financial services groups, alternative investments and structured financial products. As for Feri, its specialization lies in rating real estates and funds.
Despite a few attempts made by the EU to inject more competition into credit ratings, none have materialized, so far. According to data available with EU’s European Securities and Markets Authority (ESMA), the big three U.S rating agencies account for nearly 92% of the market.
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