BrightSphere Investment Group plc Outlook Revised To Negative On Persistent Outflows And Potential For Higher Leverage

  • BrightSphere's assets under management (AUM) significantly declined in 2018 as a result of both net outflows (fourth consecutive year) and market depreciation.
  • Leverage, on the other hand, was comfortably below 2.0x, mostly as a result of holding a larger cash balance (which we net against debt) than we originally anticipated.
  • We are revising our outlook on BrightSphere to negative from stable and affirming our 'BBB-' issuer and issue-level ratings.
  • The negative outlook reflects our expectation that organic growth will remain muted while net leverage rises, potentially above 2.0x, as a result of pressure in cash flow generation and a lower cash balance.
WASHINGTON D.C. (S&P Global Ratings) March 12, 2019-- S&P Global Ratings said 
today it revised its outlook on BrightSphere Investment Group plc to negative 
from stable. At the same time, we affirmed our 'BBB-' issuer credit and senior 
unsecured debt ratings.

BrightSphere's strategic direction continued to evolve during the last 12 
months amid further changes in ownership and at the executive level. Old 
Mutual, the largest shareholder until 2017, sold its majority stake to public 
shareholder HNA Group, a Chinese conglomerate that acquired approximately a 
25% stake in BrightSphere. HNA, which we initially anticipated would be a 
long-term partner of the company, sold its stake in 2018 to Paulson & Co., 
which ended with approximately a 22% ownership at the conclusion of the 
transaction in February of 2019. Besides changes in ownership, the company 
announced the appointment of Guang Yang as CEO of the firm, replacing Steven 
Belgrad, who was appointed as BrightSphere's CEO less than a year before. 
Guang Yang is the fourth CEO (including an interim CEO) that the company has 
had since the middle of 2017.

The negative outlook reflects our expectation that organic growth will remain 
muted while leverage approaches 2.0x as a result of pressure in cash flow 
generation while keeping a lower cash balance.

We could lower the ratings if the company operates with leverage above 2.0x. 

We do not anticipate raising the ratings in the next 18-24 months. That said, 
we could revise the outlook to stable if leverage remains comfortably below 
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