S&P rates HSE Finance, notes B

S&P said it gave preliminary B ratings to HSE Finance Sarl and its planned €630 million of senior secured notes. HSE Finance is the parent of HSE24.

In 2020, the group reported S&P Global Ratings-adjusted EBITDA of about €125 million, pending audited accounts for 2020 and adjusted for one-off items and capitalized development costs, up from €104.3 million in 2019 driven by revenue growth amid pandemic-related lockdown measures in Europe, the agency said in a press release.

S&P noted, “The rating is constrained by HSE's small scale of operations compared with peers, narrow geographical diversification and exposure to low barriers to entry in e-commerce. HSE remains a relatively small player with growth potential centered on its core markets.”

HSE plans to use the process to refinance debt and fund a €243 million dividend to owner Providence Equity Partners. “After the transaction is completed, we expect HSE's S&P Global Ratings-adjusted debt to EBITDA will increase to 5x-5.5x in 2021 from 3.5x estimated in 2020. We expect the company to deleverage below 5x in 2022, spurred by an increasing contribution from its e-commerce sales and solid operating margin,” S&P said.

The outlook is stable.

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