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Rating action

Scope Ratings GmbH (Scope) has today affirmed the BB+/Stable issuer rating of BLS Beteiligungs GmbH (hereafter ‘BLS’).

The rating affirmation incorporates the correction of errors made in the calculation of Scope-adjusted interest*, funds from operations and free operating cash flow. Scope reviewed the ratings and concluded that the corrections of those calculation errors had no impact on the ratings.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BB (unchanged). BLS's business risk profile is shaped by its narrow focus on the German market, which is balanced by its strong market share, loyal client base and solid profitability. ESG benefits and low churn rates support revenue stability, and diversification efforts offer future potential.

BLS continues to demonstrate solid business performance, maintaining its position as one of the top three bike leasing platforms in Germany, with an estimated market share of around 20%. In 2024, the company reported revenue of EUR 173m, marking an 18% increase from the previous year and sustaining a compound annual growth rate of over 40% since 2020. This growth is underpinned by a highly granular and loyal customer base of over 70,000 corporate clients, as well as a business model that supports environmental goals, such as reducing traffic emissions and improving employee health (ESG factor: credit-positive). This helps stabilise revenues and reduce the risk of client loss.

However, BLS's business model remains narrowly focused. With 90% of its revenue generated in Germany and a strong concentration in the bike leasing segment, the company is exposed to regional and sector-specific risks. While recent investments, such as the acquisition of the Probonio platform¹, suggest future diversification, these initiatives are not expected to have a significant impact on revenue in the near term.

Profitability remains a key strength. In 2024, BLS achieved an EBITDA margin of 36%, which is well above the industry average but down 4pp YoY from the previous year. The company’s asset-light model and recurring income streams from leasing, insurance and retail partnerships support continued margin strength. However, the growing share of post-lease bike sales, which carry lower margins, could affect short- to medium-term profitability, with an expected EBITDA margin of around 30%. The potential growth of the Probonio platform could partially mitigate margin pressure, as it is expected to generate gross margins of 100%.

Operationally, BLS benefits from low customer churn, strong brand recognition and a leasing model that incorporates insurance and maintenance. These factors contribute to customer retention. Tax incentives and limited differentiation among competitors further enhance client loyalty.

Financial risk profile: A (revised from A-). The revision of the financial risk profile of BLS reflects the company’s maintained conservative capital structure, high cash flow visibility, and solid interest coverage.

BLS demonstrates strong cash flow coverage, with a free operating cash flow/debt ratio of 80% in 2024 (down 2pp YoY), and forecasts indicate that this will remain above 50% on average. This is supported by early cash inflows from forfaiting, securitisation and upfront insurance premiums, which reduce the need for external financing for activities that mitigate risk to the company's balance sheet (leasing financing risks are largely transferred via asset-backed securities [ABS] structures). The asset-light model enhances stability of cash generation due to its minimal capital expenditure requirements.

BLS maintains a conservative leverage profile, with debt/EBITDA at 0.8x in 2024 (stable YoY) and funds from operations/debt at 95% (down 7pp YoY). Leasing-related liabilities are excluded from Scope-adjusted debt due to forfaiting and securitisation (ABS structures), which limits structural debt exposure. Credit risk exposure under these structures is capped at EUR 10m as at the end of 2024. Debt/EBITDA is expected to remain at around 1x, while funds from operations/debt should stabilise at between 75% and 100%. Bond covenants further limit net debt/EBITDA to 2x, which encourages management to limit incremental debt issuance and adjust discretionary spending in order to maintain a conservative capital structure.

BLS reports a strong EBITDA interest coverage ratio of 7.7x in 2024 (down 4x YoY), with expectations to remain above 7x on average. This reflects stable to growing EBITDA, as well as largely fixed-rate debt, which limits exposure to interest rate volatility. Interest income from leasing receivables is aligned with expenses on ABS financing, which limits the impact of rate changes. While future refinancing at higher spreads could pose a risk, this is offset by BLS's conservative leverage and robust cash flow.

Liquidity: adequate (unchanged). Although BLS's liquidity is considered adequate, the available cash sources (EUR 31m in unrestricted cash at the end of 2024 and EUR 43m in projected free operating cash flow up to 2026, totalling EUR 74m) fall short of the EUR 130m in debt maturing over the same period. This shortfall is mitigated by the nature of the debt, which is primarily leasing-related. Liquidity risk is reduced through high levels of forfaiting and securitisation, whereby receivables are typically sold at contract inception to generate immediate cash. Expected lease payment inflows exceed related obligations, significantly lowering refinancing risk and supporting the company’s liquidity position.

The issuer is subject to financial covenants with regard to its Namensschuldverschreibungen. These include: (i) maintaining the issuer rating at or above BB+ (with a 9-month period to restore the rating to BB+ and immediate repayment required if the rating falls below BB-), and (ii) debt/EBITDA below 2.0x (with immediate repayment required). The issuer was in compliance with its covenants in 2024. Based on Scope's forecasts, there is moderate headroom with regard to the financial covenants going forward.

Supplementary rating drivers: neutral (unchanged). Supplementary rating factors have no impact on the issuer rating.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that BLS will continue to manage its finances conservatively by keeping debt levels low (at around 1x debt/EBITDA) and generating strong cash flows. This should enable the company to fund its operations without taking on additional debt. The Outlook also considers ongoing efforts to reduce financial risk by transferring leasing-related obligations off the balance sheet via structured financing arrangements.

The upside scenarios for the ratings and Outlook are (individually):

1. Improved diversification through BLS’ expansion into other leasing products.
    
2. The successful execution of growth plans and no emergence of additional competitors.

The downside scenario for the ratings and Outlook is:

1. Debt/EBITDA exceeding 2.5x on a sustained basis.

Environmental, social and governance (ESG) factors

BLS promotes the use of bikes via its platform, thereby offering a substitute for traditional means of transportation such as cars and trains. It thereby fosters the reduction of environmental pollution, and it contributes to wellbeing and personal health.

All rating actions and rated entities

BLS Beteiligungs GmbH

Issuer rating: BB+/Stable; affirmation

*All credit metrics refer to Scope-adjusted figures.

1. Probonio is a Software-as-a-Service (SaaS) company that helps businesses manage employee benefits. Employers can use the platform's mobile app to offer their employees various benefits, such as non-cash benefits, meal allowances, fitness programmes, and bike leasing options. Probonio generates revenue through fees and commissions from purchases of vouchers for non-cash benefits.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025; European Business and Consumer Services Rating Methodology, 15 January 2025), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Philipp Wass, Managing Director
Person responsible for approval of the Credit Ratings: Thomas Faeh, Executive Director
The Credit Ratings/Outlook were first released by Scope Ratings on 26 June 2023. The Credit Ratings/Outlook were last updated on 10 July 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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