New Mountain Capital, a private equity firm with $9 billion under management, announced that it has purchased a majority stake in SNL Financial. SNL, which includes SNL Kagan, is now looking to grow and has gotten its first debt rating by Moody’s Investor’s Service.
SNL Kagan, the media data company familiar to broadcasters, is just one part of SNL Financial. It has larger operations generating data and analysis in three other sectors: financial institutions, real estate and energy.
SNL financial noted that it has been profitable every year since it was founded in 1987. It acquired Kagan Research in 2007.
“We believe we have found the ideal partner in New Mountain to help us achieve SNL’s next phase of growth,” said Reid Nagle, SNL’s founder. “I will be SNL’s second-largest shareholder after New Mountain. Our talented senior management team, who has run the company since I stepped down from day-to-day involvement in early 2010, will own the remainder. We will now have more resources than ever to achieve our strategic objectives and drive client satisfaction. This is an exciting and positive day for SNL, our employees, and our clients.”
Terms of the deal were not disclosed, but it appears New Mountain Capital cashed out some earlier equity investors and is now the lone outside investor – making it easier to make decisions about growth opportunities.
In conjunction with the New Mountain investment, SNL is seeking a $205 million senior secured credit facility and, for the first time in its history, is having its credit worthiness rated by Moody’s Investor’s Service.
Here is part of the Moody’s statement:
“Moody’s Investors Service assigned SNL Financial LC (SNL) a B2 Corporate Family Rating (CFR), B3 Probability of Default Rating (PDR), and B2 rating to its proposed $205 million senior secured credit facility. SNL intends to utilize the proceeds from the credit facility along with existing cash and an equity investment from New Mountain Capital LLC (NMC) to fund NMC’s proposed leveraged acquisition of a majority of the company’s common stock, the refinancing of existing indebtedness and to pay transaction fees and expenses. In conjunction with NMC’s investment, existing shareholders are rolling over a portion of their existing position. This is the first time Moody’s has rated SNL and the rating outlook is stable.
..Issuer: SNL Financial LC
….Corporate Family Rating, Assigned B2
….Probability of Default Rating, Assigned B3
….Senior Secured Bank Credit Revolver, Assigned a B2, LGD3 – 34%
….Senior Secured Bank Credit Term Loan, Assigned a B2, LGD3 – 34%
..Issuer: SNL Financial LC
….Outlook, Assigned Stable”
According to Moody’s, SNL had 2010 revenues of about $120 million.
RBR-TVBR observation: The Kagan operation has gone through a succession of owners since it was sold to Primedia by Paul Kagan in 2000. This time, though, rather than being sold off by another owner who’s decided it doesn’t want to be in the media data business, SNL Kagan is getting a financial boost via its parent company and the entire company is being positioned for growth, possibly including expansion into new sectors. That’s good news for the SNL Financial employees who own a stake in the privately held company.