The ratings agency says the acquisition of A-Plan will “improve” Hyperion’s business profile

Moody’s has affirmed its B2 rating for Hyperion following the broker’s acquisition of fellow Top 50 Broker A-Plan.

The ratings agency affirmed the B2 ratings on the guaranteed senior secured term loans issued by Hyperion Refinance S.a.r.l. and HIG Finance 2 Limited.

Moody’s has also assigned B2 ratings to the new £475 million guaranteed senior secured term loan facility being issued by Hyperion Refinance, and the £125 million guaranteed senior secured revolving credit facility being extended to September 2024 by HIG. The outlooks on all issuers are stable.

The action follows HIG’s announcement of the proposed acquisition of A-Plan Group in a near £700m deal, with David Howden describing the deal as a ‘stepping stone’ to further growth for the group.

Explaining the decision, Moody’s said that the deal will “improve” Hyperion’s business profile “through increased scale and greater business diversification”.

Moody’s estimates that the proposed transaction will increase Hyperion’s pro forma debt-to-EBITDA ratio to approximately 7x, which is high for the company’s rating category, but Moody’s expects the group to reduce its leverage in the next 12-18 months to not more than 6.5x.

The ratings agency also expects that Hyperion’s revenue and EBITDA will continue to increase, albeit at a slower pace compared to recent years, and will facilitate deleveraging.

However, a material deterioration in the group’s profitability or a failure to reduce financial leverage could result in negative rating action.