S&P rates BetaNXT, loans B-

S&P said it assigned B- ratings to BetaNXT Inc. and its $100 million five-year revolver and $750 million seven-year first-lien term loan. The recovery ratings on the loans are 3, indicating average recovery prospects in default. The outlook is positive.

“Our ratings on BetaNXT reflect its small scale and niche capabilities in the fragmented wealth management industry. With revenue for the last 12 months ended December 2022 of about $321 million, BetaNXT derived over 90% of revenue from its Beta Platform, which helps automate transaction processing requirements for wealth managers, brokers, and investment banks that self-clear rather than settling through a clearing firm.

“Currently, about half of the total addressable clearing market does not self-clear. Approximately 40% of the remaining half use an internal back-office rather than a platform like the one provided by BetaNXT or its peers, FIS and Broadridge, that have comprehensive product suites across the wealth management sector,” the agency said in a press release.

S&P noted the company’s top six clients account for most of its revenues and several of them will expire in two to three years. “However, we recognize these are long-standing clients and are committed to self-clearing transactions due to the control benefits and modestly improving revenue opportunities under rising rates.”

The outlook mirrors a forecast for improving operating cash flow beyond 2023 as one-time costs diminish and revenue increases, S&P said.

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