Fitch Ratings has revised
Anima is an Italian listed investment manager (IM) with
Key Rating Drivers
The Outlook revision primarily reflects a reduction in Anima's gross leverage (gross debt/EBITDA, excluding performance fees) to 2.8x at end-2021, within Fitch's 'BBB' range for IMs (1.5x to 3.0x) from around 3.8x in mid-2021. It also reflects Anima's credible commitment to principally use currently sizeable liquid assets (
Anima's business profile is exposed to potential volatility in the Italian operating environment, where its client base and AuM are concentrated. Its retail franchise is wholly domestic and focuses on the lower end of the affluent market (liquid wealth between
The launch of new products and renewed marketing efforts resulted in modest retail NNM inflows during 2021 (
Anima is widening its distribution network (eg five new partner banks in 2021), but remains exposed to the ongoing consolidation of the Italian banking sector, which could reduce its distribution channels in the long term. These risks could stem in particular from
Anima's liquidity profile is adequate and its bond issue in 2021 further lengthened the maturity of its debt. Its funding profile has sizeable bullet repayments in
Anima's EBITDA margins have been consistently adequate (EBITDA/gross recurring fees of 23% in 2021), aided by a lean cost base. Over the longer term, we see some risk of margin compression in relation to the large retrocessions that Anima pays to its partner banks as distribution commissions (retrocessions account for about 70% of gross fees). Average net margins on AuM excluding Class I mandates have remained stable in the last five years at about 30bp.
The rating of Anima's senior unsecured debt is equalised with the company's Long-Term IDR, reflecting our expectation of average recoveries.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A positive rating action could stem from a cash-flow leverage ratio sustainably below 2.5x, in particular if in combination with improved retail NNM inflows, franchise resilience (via a more diversified distribution network) and profitability.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A gross debt/EBITDA ratio sustainably above 3x would lead to a downgrade. A notably higher net cash flow leverage (in particular if arising from outsized non-operational cash outflows such as dividend payments or share buy-backs) would also be credit-negative, especially if combined with continued high gross leverage.
Loss of distribution partners and inability to access alternative retail distribution channels (eg other banks, direct channels) could also put pressure on Anima's ratings.
Material and sustained NNM outflows could affect our assessment of Anima's franchise leading to rating pressure.
The rating of Anima's senior unsecured notes is primarily sensitive to a change in Anima's Long-Term IDR and additionally to changes in Fitch's recovery expectation, for instance the introduction of a more senior debt layer.
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
RATING ACTIONS
Entity / Debt
Rating
Prior
LT IDR
BBB-
Affirmed
BBB-
ST IDR
F3
Affirmed
F3
senior unsecured
LT
BBB-
Affirmed
BBB-
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
(C) 2022 Electronic News Publishing, source