Investing.com - S&P Global Ratings upgraded Legence Holdings LLC to ’BB-’ from ’B+’ on Friday, citing reduced financial sponsor ownership and stronger-than-expected first-quarter 2026 performance. The ratings agency assigned a positive outlook to the engineering, consulting, installation, and maintenance services provider.
Blackstone reduced its ownership stake in Legence to approximately 47% from 72% at the September 2025 initial public offering. S&P Global Ratings said it believes Legence’s financial policy and governance will improve following the meaningful reduction in sponsor ownership. The company used IPO proceeds to reduce debt in 2025, lowering S&P Global Ratings-adjusted leverage to 4x at fiscal year-end 2025 from 7.8x in fiscal 2024.
Legence reported accelerating growth in high technology end markets, including data centers, and strong demand across mission-critical infrastructure in the first quarter. The company raised its full-year guidance after reporting more than 100% growth on a pro-forma basis and 57% growth excluding the contribution from The Bowers Group acquisition in January 2026. S&P Global Ratings expects approximately 63% revenue growth on a pro forma basis for the full year and adjusted EBITDA growth of approximately 49% to about $450 million in 2026.
The Bowers acquisition added approximately 1.3 million square feet of fabrication capacity and a roughly $5.4 billion backlog. Data center and technology customers account for about 62% of Legence’s overall revenues, with the company positioned to capture demand for complex heating, ventilation, and air conditioning systems from large technology companies including Open AI, Amazon Web Services, Oracle, Meta, Microsoft, and Alphabet.
The positive outlook reflects S&P Global Ratings’ view that it could upgrade Legence over the next 12 months if the company continues to outperform expectations or meaningfully reduces sponsor ownership while reducing leverage to below 3x and maintaining free operating cash flow to debt above 15%. The ratings agency said it could revise the outlook to stable if the company manages leverage above 3x or free operating cash flow to debt below 15%.
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