Moody's rates Claudius Finance Parent B2

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Claudius Finance Parent Sarl. (Cegid).

Concurrently, Moody's gave B2 ratings to the planned €880 million senior secured term loan B (B1, B2, B3), the proceeds of which will be mainly used to fund the planned acquisition of Talentsoft SA and to refinance Cegid's debt and €75 million senior secured revolving credit facility issued at Claudius Finance Sarl. The outlook is positive.

“Cegid's B2 CFR reflects the company's (1) leading position in enterprise resource planning (ERP) for the mid-market sector in France; (2) high switching costs for enterprise software products, which results in low customer churn; (3) good revenue visibility owing to the recurring nature of maintenance and software-as-a-service (SaaS) fees; and (4) good liquidity,” Moody’s said in a press release.

However, the agency said, the rating is constrained by Cegid's focus on France, which represents about 80% of revenue, its high degree of concentration of its product portfolio, its exposure to small- and medium-sized businesses, which have a higher degree of operating and financial risk, and the risk of piling on debt from debt-funded acquisitions or shareholder distributions.

“Moody's expects Cegid will continue to perform well over the next 12-18 months, with revenue rising towards €630 million in 2021 on a pro forma basis including the full-year impact of the Talentsoft acquisition, which is anticipated to close in Q3 2021, and €685 million in 2022. Moody's-adjusted EBITDA is forecast to increase towards €240 million in 2021, again pro forma the full-year impact of the Talentsoft acquisition, and €280 million in 2022,” the agency said.

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