UK start-up raises fresh capital for race in credit markets data

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9fin, a fast-growing information provider to corporate credit investors, has raised $50mn in financing as it battles for dominance in the market for debt research.

Highland Europe, a prominent growth capital investor, is to lead the 9fin series B round that is to be formally announced on Monday. The parties did not disclose the implied 9fin valuation but the Financial Times had previously reported that the London-based fintech was to be valued at roughly $500mn on current annual recurring revenue of about $25mn.

Steven Hunter, who co-founded 9fin in 2016 and now serves as chief executive, told the FT he believed that there would soon be a data services company serving the debt market which would generate $1bn in revenue annually.

“Someone can build something in the same ballpark as a FactSet, Morningstar, or Refinitiv or Bloomberg type of scale. There is at least a billion-dollar revenue business to be built in this space,” Hunter said in an interview.

Hunter, 32, began his career as a debt markets investment banker at JPMorgan in the UK and later became a credit investor. He said he quickly discovered that there was insufficient data on debt issuers who were often privately held or small.

“I complained to anyone who would listen about how archaic the technology was in my day and complain about how dreadful the data was,” he said.

Hunter founded the company with Huss El-Sheikh, a friend and university classmate who at the time worked in technology at Deutsche Bank. While 9fin’s roots are in traditional high-yield and distressed debt, the steady march of capital intermediation away from banks and towards asset managers has created new asset classes in private credit and asset-backed lending.

“People are [increasingly] looking for a debtlike return for a pool of capital,” Hunter said, adding that the largest incumbent data providers were still focused on stock market investors.

“I think about where clients make money, what are the most important parts of financial markets in the world, it’s debt,” he said.

9fin has nearly 250 employees, the majority in London and Belfast, and is expected to turn cash flow positive next year. The money from Highland Europe, a well-known software venture capital group, will be focused on expanding engineering and technology operations in the US, where its business is most quickly growing. Highland’s co-founder Fergal Mullen will join the board of 9fin, which has now raised nearly $90mn in funding since its inception.

KKR, Carlyle and Mubadala were among the other parties that had expressed interest during the sales process.

Like its direct competitors, including Reorg, Fitch and Debtwire, 9fin employs journalists as well as lawyers and financial analysts to break news and provide analysis on credit deals and market trends. Hunter said 9fin was formed primarily as a technology firm that would create better tools for collecting and processing vast amounts of market data.

Debt information providers often sell their products for more than $100,000 a year per user, setting up a fight among the top players to become the industry standard.

“It’s not winner takes all but it is winner takes most,” said Hunter.

He contended that the steep cost of the data services should be easily justifiable.

“Think about how much a deal fee you make on a transaction. Do you think 9fin will help you win one more deal in the next decade? If the answer to that question is yes, the return on investment versus a licence cost is just crazy,” he said.