Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Advent to test choppy buyout market with sale of France's IDEMIA -sources

Published 01/09/2022, 16:53
Updated 01/09/2022, 18:11
© Reuters.

© Reuters.

By Julien Ponthus, Mathieu Rosemain and Emma-Victoria Farr

PARIS/FRANKFURT (Reuters) - Private equity group Advent is set to launch the sale of French biometrics and fingerprint identification firm IDEMIA, sources familiar with the matter said, in a multi-billion euro deal that will test a choppy buyout market this autumn.

Goldman Sachs (NYSE:GS) and Rothschild have been mandated by Advent and are expected to launch the sale imminently, sources close to the deal said. The two banks, IDEMIA and Advent all declined to comment.

The timing of what would be one of the biggest private equity deals of the year in France is not ideal from a seller's point of view.

Wall Street's Nasdaq has lost about 25% year-to-date and the European tech index has plunged over 30%.

The valuation of tech companies typically suffers when interest rates rise, as they cut the appeal of the distant cash flows of fast-growing companies versus safer government bonds.

Sources said it was hard to value IDEMIA as a whole as some bidders would likely only submit offers for its prized biometrics and ID business and could make a pass on the unit providing sim cards and payments platforms.

Sources have mentioned a rough value of 3 billion euros ($2.98 billion) for the biometrics and ID business and about one billion for the sim card operations, but precise valuations will not be drafted until the company's data is accessible.

The tightening of monetary policies and a slowing economy have created a tougher environment for debt syndication, hindering the ability of buyers to raise debt and compete in auctions.

Major U.S. and European banks wrote down hundreds of millions of dollars on leveraged loans in the second quarter and the bill is expected to rise.

IDEMIA, which has been majority owned by Advent since 2017 and also counts state-owned investment bank Bpifrance as a shareholder, provides facial recognition and identification products for border control, working with government agencies to verify travellers' identity.

Because of the sensitivity of these activities, a successful bidder will need to get government clearance.

"There's a mix of French and U.S. authorities aiming to protect their respective proprietary technologies (...) it won't be an easy deal for any industrial group," a source close to IDEMIA said.

French President Emmanuel Macron's pro-business government, which otherwise seeks to attract international investors, has strengthened its oversight over foreign investments.

The fact that IDEMIA has an international client base and is already owned by a non-French entity suggests the French government would not necessarily insist on finding a national acquirer, sources said.

($1 = 1.0060 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.