by Julien Ponthus, Mathieu Rosemain and Emma-Victoria Farr
PARIS/FRANKFURT, Sept 1 (Reuters) – Advent will test the appetite of the M&A and private equity markets this fall with the upcoming multibillion-euro listing of digital security firm IDEMIA.
If confirmed, this sale of IDEMIA would take place in a context of more restrictive financing conditions for the funds and fears of recession.
Investment banks Goldman Sachs and Rothschild have been commissioned by Advent and the sale is expected to go live very soon, sources familiar with the matter told Reuters.
Goldman Sachs, Rothschild, IDEMIA and Advent declined to comment.
From a seller’s perspective, the timing of what should be the biggest private equity deal is anything but ideal.
Since the start of the year, the Nasdaq has lost about 25% and the European index of technology stocks has lost more than 30%.
Rising interest rate environments are never favorable for valuations in the technology sector, with investors favoring sovereign bonds deemed to be safer at the expense of high-growth companies.
Tighter monetary policies and a slowing economy in both the United States and Europe have created a more difficult environment for bank syndications, penalizing acquirers’ ability to raise funds and participate in sale processes .
In the second quarter, the major American and European banks spent hundreds of millions of write-downs on leveraged loans in their accounts and the bill will increase this year given the financing they have undertaken to provide.
Sources who have analyzed the upcoming sale of IDEMIA point out that the digital security company is difficult to value as a whole and that some potential acquirers may only be interested in the biometrics and cryptography businesses and ignore the security businesses. SIM cards and payment systems.
According to the sources, the biometrics and cryptography activities are valued at 3 billion euros and the SIM card activities at around one billion.
Accurate valuations will only be established once takeover candidates have access to company data.
IDEMIA, supported by Bpifrance, manufactures facial recognition products and biometric identification products, as well as identification tools for border control.
The company works in close collaboration with the national agencies for the verification of the identity of travelers and the control of irregular immigration.
Due to the sensitive nature of these activities, the successful candidate for the acquisition of IDEMIA will also have to obtain the green light from the government.
“There are several French and American authorities concerned with the protection of respective proprietary technologies (..) it will not be an easy task for industrial groups (wishing to acquire IDEMIA)”, said a source close to IDEMIA.
The French government, which is also seeking to attract investors, has tightened its control of foreign investments, both by lowering the threshold required for their government authorization and by extending the list of sectors deemed strategic.
Since IDEMIA has a very international clientele and its current owner is foreign, the government may not require the buyer to be French, the sources said. (Report Julien Ponthus, Mathieu Rosemain and Emma-Victoria Farr, French version by Matthieu Protard, edited by Sophie Louet)