Fitch assigns Biofarma B, notes B+

Fitch Ratings said it assigned Kepler SpA (Biofarma) a first-time long-term issuer default rating of B and B+/RR3 (56%) ratings to its €345 million of seven-year senior secured notes.

“The ratings are constrained by Biofarma's small size, limited diversification and business concentration in combination with material initial leverage as part of the company's acquisition by a private-equity investor. Rating strengths are its established market niche position as a CDMO (contract development and manufacturing organization), specialized in nutraceuticals (non-pharmaceutical enhancers), which benefit from its well-invested manufacturing platform located in northern Italy, and from structurally growing demand for its products,” the agency said in a press release.

Fitch said it forecasts Biofarma to post negative free cash flow after acquisitions and divestitures, mainly because of the acquisitions it expects the company to undertake over the rating horizon. “Excluding the acquisitions, we expect the company to generate consistently positive FCF.”

The outlook is stable.

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