Advent begins Idemia premarketing ahead of summer sale launch

The US buyout group is expected to distribute information memoranda during the summer, according to three of the sources, with one of them cautioning that the timeline could slip further into 3Q22. A sellside advisor is yet to be appointed, another of the sources added.

Advent was reported to be mulling a sale of Idemia earlier this year in a process that could value the company at USD 4.6bn (EUR 4.3bn). The expectation is that the company will be sold as a whole, one of the sources said, despite reports that the company's government and enterprise units could be sold off to different buyers.

Idemia is expected to be marketed off EBITDA of more than EUR 200m, one of the sources said. The distribution of marketing documents should give visibility on the company's profitability and valuation, according to another source.

The general robustness of border control and online ID authentication-related businesses to market jitters should benefit the company's valuation prospects, one of the sources added. However, while Advent has streamlined the business under its ownership, prospective bidders may question the future growth potential and the capacity to expand via M&A, another of the sources added.

Idemia's sale is expected to garner the interest of a wide array of private equity firms, as well as software and cybersecurity specialists, sources noted. Bidders with a defence or industrial automation capacity, cybersecurity strategics and buyout groups with existing investments in government services assets are among likely bidders, one of the sources added.

Defence group Thales, which was reported as a possible suitor, is expected to be among the frontrunners to acquire the business, several sources said. BAE Systems, Hensoldt and Siemens might also look at the business, while Cisco might be among US-based strategics to show interest, another source suggested.

Among potential private equity players to signal an interest could be Carlyle given its track record with A&D and government affairs, while tech specialist Thoma Bravo could also take a look, one of the sources said. Government services-focused Veritas Capital might also take interest, this source added.

A sale of Idemia, which also provides identification solutions for border control works, could draw potential FDI screening from the French government, one of the sources said. The company's dealings with sensitive citizens data could mean that potential bidders would need to soothe potential political concerns and regulatory hurdles, this source added.

However, sponsors are used to responding to potential government requirements in areas concerning jobs, safeguarding production sites and French domiciliation, one of the sources said. "For every company with innovative or strategic tech assets, investors expect some political scrutiny and funds are now used to it," this source added.

Idemia, which generated EUR 2.2bn in revenues last year, provides facial recognition systems, biometric identification products and fingerprint scanners. The company was formed in 2017 by combining Advent-owned French digital security provider Oberthur with Morpho – the former identity and security business of French technology and industrial giant Safran, which was acquired by Advent for EUR 2.4bn in 2017.

French state-controlled investment bank Bpifrance supported majority owner Advent in Morpho's acquisition and retains an undisclosed minority stake in Idemia today, as previously reported.

Representatives for Advent, Bpifrance and Thales declined to comment. Idemia did not respond to requests for comment.

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