By Sarah Young, from Acquisitions Monthly
It’s widely acknowledged that the tables have turned on private equity and with debt scarce it is their bids for assets which are looking uncompetitive compared to offers from the strategic buyers they out-priced time and again in the days of readily-available leverage.
But there are exceptions to this new reality.
Insiders say that bank appetite to lend to private equity firms bidding for German credit card payments processor Easycash is such that the four or five buyout houses participating in the UBS-run auction are in with a reasonable chance of winning the asset.
Banks are willing to lend between 3x and 4x last year’s ebitda to fund the deal, meaning it could weigh in at around the €250 million plus mark.
The performance of the company over the last twelve months and the stability of its earnings going forward plus its strong development under its current private equity owner, Warburg Pincus, has apparently convinced banks that lending to buyout firms to fund the acquisition of Easycash is a wise use of their limited liquidity.