Carlyle buys into Global Credit Ratings

January 17, 2017

Global Credit Ratings has the biggest share of credit ratings in Africa

Private equity group Carlyle has acquired about half of Global Credit Ratings (GCR) for an undisclosed amount, it was expected to say on Tuesday.

GCR provides credit ratings and analysis services to insurers, financial institutions, the public sector and other corporate entities. Carlyle is buying the shares from GCR’s founding managers and German development financier DEG.

“[The] GCR management team has created a truly local rating agency, which combines global best practice with an on-the-ground team with deep knowledge of the local markets,” said Eric Kump, who jointly heads the Carlyle sub-Saharan Africa team.

GCR, led by Marc Joffe, now has the biggest share of credit ratings in Africa – more than S&P Global Ratings, Moody’s and Fitch – and has offices in Johannesburg, Harare, Lagos and Nairobi.

Joffe said the three large ratings agencies may have cornered the market internationally, but the picture was different in emerging markets. GCR serves 400 customers in 20 African countries.

He said the Carlyle investment would help in “further augmenting GCR’s brand, market position and credibility”.

Kump said GCR was reasonably priced compared to its larger competitors.

“[The competitors] have a narrow focus and high fees reflecting their high cost structures. We and GCR think there is an opportunity for a local, high quality and reasonably priced competitor which is willing and able to serve the full spectrum of companies and structured products.”

Carlyle will pay for the investment from its $698m Carlyle sub-Saharan Africa Fund, which has invested in five companies in Africa. It expects the deal to close early in 2017.

The GCR deal is its third investment in SA, following on investments it has made in Ti-Auto, a tyre retailer and wholesaler which owns Tiger Wheel & Tyre; and telecommunications provider CMC Networks.

Kump said Carlyle would leverage its global expertise in the credit-ratings sector gleaned through its investment in Canada’s DBRS to help it expand further. Carlyle and fellow private equity firm Warburg Pincus bought a stake in DBRS in 2015. Source: BD Live