Nexi SpA

The positive outlook reflects the possibility that we could raise the ratings on Nexi over the next 12 months if we see evidence that, as a publicly traded company, Nexi will maintain a more conservative financial policy than in the recent past, and in particular, will refrain from any material debt-financed acquisitions. This would hinge on sustaining a debt-to-EBITDA ratio of 4x-5x and a funds from operations (FFO)-to-debt ratio above 12% over the next 12 months. Conversely, we could revise the outlook to stable if, in our view, the company had not demonstrated a reduced tolerance for debt. This might occur if it renewed its strategy of using debt-financed acquisitions to expand its business operations. GDP growth in Italy will

...Good prospects for the electronic payments market in Italy will support Nexi's revenue growth. We believe that Nexi's market shares in the acquiring and issuing businesses of 70% and 60% at end-2018, respectively, will allow it to enjoy growth in the card payments market in Italy. The penetration of electronic payments in the country was around 26% at end-2018, and likely to gradually converge toward the average of 45% observed in Western Europe. As such, we anticipate Nexi could organically increase revenue over the next years, even in absence of further extraordinary operations. We expect that management will preserve its leverage metrics after the IPO. We understand the company is now focused on organic growth. As such, we expect Nexi will demonstrate lower tolerance for indebtedness than in the past. We currently factor in our ratings the possibility that management could play an active role in the ongoing industry consolidation through debt-financed acquisition, though. We still consider...

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