Carlyle Group LP and Warburg Pincus LLC said they would buy DBRS Ltd, the world’s fourth-largest credit rating agency, in partnership with a consortium of Canadian investors including the firm’s founder.
Reuters reported earlier this month a private equity consortium of Carlyle and Warburg Pincus was in advanced talks to buy Toronto-based DBRS for more than $500 million.
The deal is the second in the credit rating industry this month, after U.S. publisher Hearst Corp said it would raise its stake in Fitch to 80 per cent from 50 per cent in a deal valued at about $2 billion.
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Carlyle will fund the deal through its unit Carlyle Global Financial Services Partners II, while Warburg Pincus’ investment will come from Warburg Pincus Private Equity XI, L.P.
DBRS founder and controlling shareholder Walter Schroeder will remain an important investor, the companies said in a statement on Monday.
The agency rates debt of companies, local authorities and countries, as well as structured finance products such as commercial mortgage-backed securities.
DBRS has a 2 per cent share of the ratings market dominated by McGraw Hill Financial Inc-owned Standard & Poor’s Financial Services LLC, Moody’s Corp and Fitch Ratings Inc.
Terms of the deal, expected to close in the first quarter of 2015, were not disclosed.
DBRS was advised by Perella Weinberg Partners and CIBC World Markets Inc advised Carlyle Group and Warburg Pincus.
© Thomson Reuters 2014