Advent to test the turbulent takeover market with the sale of French IDEMIA – sources

PARIS/FRANKFURT, Sept 1 (Reuters) – Private equity group Advent is set to launch the sale of French biometrics and fingerprint identification company IDEMIA, sources familiar with the matter said, in the part of a multibillion-euro deal that will test a shaky takeover market this fall.

Goldman Sachs and Rothschild have been mandated by Advent and are expected to launch the sale imminently, sources familiar with 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 (.NDX) is down about 25% year-to-date and Europe’s tech index has plunged more than 30%.

The valuation of technology companies generally suffers when interest rates rise, as they reduce the attractiveness of the distant cash flows of fast-growing companies relative to safer government bonds.

Sources said it was difficult to assess IDEMIA as a whole, as some bidders would likely only bid for its prized biometrics and ID business and could pass on the card-providing unit SIM and payment platforms.

Sources have mentioned an approximate value of 3 billion euros ($2.98 billion) for biometrics and identification activities and around one billion for SIM card operations, but precise assessments will not be made. drafted until the company’s data is accessible.

Tighter monetary policies and a slowing economy have created a more challenging environment for debt syndication, hampering buyers’ ability to take on debt and participate in auctions.

Major US 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, majority-owned by Advent since 2017 and which also counts public investment bank Bpifrance among its shareholders, provides facial recognition and identification products for border control, working with government agencies to verify identity travellers.

Due to the sensitivity of these activities, a successful bidder will need to obtain government clearance.

“There is a mixture of French and American authorities aiming to protect their respective proprietary technologies (…) it will not be an easy matter for any industry group,” said a source close to IDEMIA.

French President Emmanuel Macron‘s pro-business government, which is also seeking to attract international investors, has stepped up its oversight of foreign investment.

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

($1 = 1.0060 euros)

Reporting by Julien Ponthus, Mathieu Rosemain and Emma-Victoria Farr, editing by Silvia Aloisi and Susan Fenton

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