After Advisor Group announced its plan to acquire a large bank-focused broker-dealer, Fitch Ratings affirmed a rating of debt at B-.
Last month, Advisor Group acquired Infinex Investments Inc. According to Fitch Ratings, the acquisition of Infinex will not significantly alter Advisor Group's leverage, as measured by gross debt to earnings before interest, taxes, depreciation, and amortization.
Fitch added that the rating reflects Advisor Group's "improving scale as one of the largest independent financial advisers in the U.S.; cash-generative business model; a relatively flexible cost base; and high adviser retention rates." However, the rating is constrained by "relatively high leverage levels and weaker interest coverage, low margins and the highly competitive environment associated with the independent broker-dealer and registered investment advisor, or hybrid RIA, business model", according to Fitch Ratings.
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