News came at the end of July that Moody’s had acquired risk analysis firm RiskFirst in a move that allows Moody’s to extend its range of risk solutions to the institutional buyside and RiskFirst to extend its analytical capabilities.
Moody’s, with revenue of USD4.4 billion, offers credit rating, research tools and analysis within the capital markets, while RiskFirst’s PFaroeDB platform is a risk solution for US and UK defined benefit pension markets, supporting over 3,000 plans and more than USD1.4 trillion in assets. The firm also offers solutions for the institutional investment market, including endowments, foundations and asset managers.
Matthew Seymour, RiskFirst’s CEO, explains that the firm started 10 years ago, with its PFaroe platform launching in 2009. “We started off providing PFaroe DB to large pension plans as a risk management platform for large DB plans and then continued to grow that out into a suite of analytics and stretch further into the institutional investment side,” Seymour says.
“We have been on a journey where we have been growing and expanding and teaming up with a group like Moody’s helps us accelerate the journey we have been on and leverage off their scale.”
That leverage will come from Moody’s distribution capabilities as well as its internal data resources. Andy Frepp, Managing Director and General Manager at Moody’s Analytics, says: “We have always had great ambitions to get involved in risk analytics between asset owners, pension funds and asset managers and RiskFirst fits pretty well into that strategy.”
Frepp sees a number of areas where the two companies will integrate their analytics functions. “We can enhance the RiskFirst product with for example ESG factors, which will be pretty appealing to the customers in the RiskFirst segment,” Frepp says.
The terms of the transaction were not disclosed. Moody’s expects the acquisition of RiskFirst to be accretive to earnings per share on a GAAP basis in 2022. On an adjusted EPS basis, which excludes purchase price amortisation, the transaction is expected to be accretive in 2021. RiskFirst generated GBP16.5 million of revenue in 2018. The transaction was funded with offshore cash on hand.