BC Partners hits brakes on iQera sale amid market volatility

The sale has not been formally called off, one source noted, suggesting it could be reactivated when market conditions improve.

Ongoing dislocation in credit markets makes it harder for bidders to finance big tickets, this source said, adding that other large-cap transactions in France are being postponed.

Sellside valuation expectations were high, a second source said. BC Partners was understood to be targeting a valuation well in excess of EUR 1bn based on an annual cash EBITDA of nearly EUR 200m, as reported.

The sponsor acquired the company – then known as MCS – from Cerberus Capital Management in 2017 for EUR 382m through its BC European Capital X fund, established the year prior.

Some five years into its investment, it launched an auction in spring this year with JP Morgan and BNP Paribas as advisers, as reported.

The asset had caught the eye of the likes of Apollo Global Management, Cerberus, CVC and TowerBrook Capital Partners ahead of the first round of bids, Mergermarket reported in early May.

Apollo, CVC and TowerBrook were subsequently reported in the local press to have been invited into the second round in late 2Q22. Talk around the process had since quieted down, a sector banker noted.

Founded in 1986, Paris-based iQera acquires portfolios of non-performing loans (NPLs) from financial institutions and offers debt management services to corporations.

Its 1H22 results showed 4% YoY growth in cash revenues to EUR 167m, reflecting growth in debt purchase and servicing income, as well as "sound" performance of back-book collections.

Cash EBITDA stood at EUR 85m in the first half of the year with a 51% margin, while leverage levels shrank from 3.5x in 1H21 to 3.1x at the end of June.

Despite market conditions, the debt purchase and recovery space has seen some midmarket activity this year, including the sale of Hoist Finance's UK operation to Permira-backed Lowell at GBP 370m EV in April.

UK peer Lantern Group has been recently put on the market by Copper Street Capital, with Ashcombe Advisers running the auction, as reported by this news service. Lantern is expected to post FY22 EBITDA in the GBP 15m region, as reported.

BC Partners and Montefiore Investment, which holds a minority stake in iQera, declined to comment. iQera did not return a request for comment.

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