NEW YORK, May 16, 2023–(BUSINESS WIRE)–KBRA confirms the issuer and senior unsecured debt rating of A for Petershill Partners Inc. (“Petershill Delaware”), a wholly owned underwriter of Petershill Partners PLC (“PHP” or the “Company”). . PHP has guaranteed a private placement of $500 million of Petershill Delaware senior unsecured debentures. The “Outlook” rating is “Stable”.
Important creditworthiness considerations
PHP’s credit profile benefits from a management team of highly respected industry professionals combined with the support of Goldman Sachs Asset Management (“GSAM”). Management has built an extensive and diverse portfolio of high-performing wealth managers. The focus on private equity, real assets and personal credit has resulted in compelling growth, durable fund structures, predictable management fees and the opportunity to participate in significant carry and investment gains over time. PHP benefits from greater diversification by fund, vintage and strategy compared to a typical mid-sized manager. PHP’s margins and earnings stability will be significantly enhanced by structural safeguards and debt/EBITDA is expected to be managed at conservative levels. Given the resilience of PHP’s cash flow generation, interest coverage should remain quite comfortable even in a stressed scenario. Balance sheet leverage is low and shareholder equity is plentiful.
The Petershill Group is a long-established leader in providing growth capital to and collaborating with independent alternative wealth managers (partner firms). PHP is managed by GSAM, whose Petershill team has been operating since 2007. In October 2021, PHP’s initial public offering (IPO) created a permanent capital base to fund partner company development, acquisitions and other growth initiatives. The formation of a separate company will be instrumental in further building the Petershill brand. PHP is 76% owned by funds managed by Goldman Sachs, with a free float of 24%. As part of the IPO, PHP entered into a seven-year operator agreement with GSAM, which will be renewed annually after seven years. PHP’s corporate governance is bolstered by a fully independent Board of Directors with extensive experience in wealth management and the financial sector.
In view of the stable rating outlook, an upgrade is not expected in the next one to two years. Over the medium term, there is significant potential for upside as management executes on growth and diversification plans, maintains leverage metrics at conservative levels, and continues to generate higher operating cash flow over time. Ratings could come under pressure in the event of an unforeseen drop in partner company AUM overtime or other financial issues resulting in lower fee generation and cash flow. Nonetheless, KBRA recognizes the company’s resilience in the face of a more difficult environment. Significantly higher leverage than expected could adversely affect ratings.
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