Private equity group Permira has taken over a majority stake in Reorg, valuing the distressed debt and bankruptcy information provider at around $1.3bn in the latest deal reflecting heightened interest in specialist content services.
Permira acquired its stake from rival buyout group Warburg Pincus, which tripled its 2018 investment. It originally bought more than 50 per cent of Reorg at a $400mn valuation. The remainder of the company will be owned by Reorg’s founder Kent Collier and the company’s employees.
Reorg has garnered interest from several private equity and strategic rivals in recent months, given that its expensive subscription-based business provides stable growth and its customer base is composed of very “sticky” users. News of Reorg’s potential sale was first reported by the Financial Times in June.
The transaction comes at a point in the business cycle that makes Reorg’s services particularly valuable. Credit markets have tightened substantially in response to central banks raising interest rates in an attempt to cool inflation, increasing stress on some corporate borrowers.
An S&P ratio that, among speculative grade credits, tracks distressed companies — those whose bonds trade more than 10 percentage points higher than US Treasuries — doubled to nearly 10 per cent in June.
“Kent and his team have built an impressive data-driven platform that provides deep insight and powerful analysis of the complex and often opaque credit markets,” Daniel Brenhouse and Andrew Young, partners at Permira, said in a statement.
Reorg has sought to combine the features of a technology company, for example by using machine learning to quickly scrape legal filings along with deal analysis, with original reporting from journalists and analysis by former lawyers and bankers.
Its annual subscriptions can cost in excess of $100,000 as the service can replace the work of junior attorneys. Reorg said its service reaches more than 25,000 people across a variety of institutions, including law firms and bankruptcy professionals.
Collier, a distressed-debt investor and blogger, launched Reorg in 2013 and has remained the company’s chief executive.
Earlier this year, influential data provider Morningstar acquired Leveraged Commentary and Data, which reports on debt financing transactions, from S&P. Last year, Fitch Group acquired CreditSights, a research firm focused on analysing corporate debt, from its founders.
Reorg’s clients include hedge funds, investment banks and law firms. The company is best known for its intensive daily coverage of bankruptcy court hearings and behind-the-scenes negotiations between creditor groups and businesses.