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PitchBook founder and CEO John Gabbert (Photo: John Vicory)
PitchBook is poised to expand its footprint in the growing market for private-debt data and insights after parent company Morningstar agreed to acquire the Leveraged Commentary & Data unit of S&P Global.

The cash deal is valued at up to $650 million, including a $50 million payment six months after closing if certain sales targets are reached.

Morningstar said the combination of LCD's private credit offerings and PitchBook's premier data and research would allow it to offer clients a one-stop-shop for news and research on private finance.

Seattle-based PitchBook, led by founder John Gabbert, specializes in providing research insights and proprietary data on the private equity and venture capital markets, with coverage spanning IPOs, fundraising, and mergers and acquisitions.

The LCD acquisition is meant to complement PitchBook's database through access to LCD's platform, which offers market news, analysis and data on the US and European leveraged loan and high-yield bond markets. The business reported revenue of $56 million last year.

LCD's credit market coverage also includes assets like investment-grade bonds, distressed debt, bankruptcies and collateralized loan obligations, or CLOs.

Gabbert said the acquisition would be a natural extension for PitchBook, which aims to provide its clients with coverage of the entire spectrum of private equity capital deployment.

The leveraged finance market has helped fuel the leveraged buyout boom since it came onto the scene in the 1980s. Private equity buyouts often rely on financing in part from debt instruments like leveraged loans, high-yield bonds and seller notes. US leveraged finance issuance hit $1.08 trillion in 2021, breaking the trillion-dollar threshold for the first time, according to an S&P report. The bulk of new issuance in the market last year, $615 billion, was in loans, while high-yield bond issuance reached $464.5 billion, the report said.   
Also included in the deal is LCD's S&P/LSTA Leveraged Loan Index, which Morningstar considers a flagship product of the industry.

LCD, which spun off from S&P Global following the company's purchase of IHS Markit last year, also offers more than 500 leveraged loan indexes in the US and Europe. These will become part of Morningstar Indexes, a fast-growing segment of the company.

New York-based LCD's existing leadership team and other employees, totaling about 60 people, will join PitchBook upon closing of the deal, expected in the third quarter.

Chicago-based Morningstar said it plans to fund the transaction with a combination of cash on hand and a new credit facility. The deal is expected to boost adjusted net income per share, excluding the cost of M&A-related amortization and integration, in the first year after closing.

It also said it expects a tax benefit from a step-up in tax basis and future deductions as part of the transaction.

This article originally appeared on PitchBook News