MILAN : ION, a privately-held financial technology group, is looking to pay for Italian bad loan recovery firm Prelios in several stages as it holds discussions with U.S. hedge fund Davidson Kempner Capital Management, sources said.
The two sources close to the matter said ION and DK were discussing a so-called earn out clause, which would see ION pay part of the price at closing and the rest once the business hits certain financial targets.
However, it is not certain the parties can reach an agreement, one of the sources said. ION and DK declined to comment.
Goldman Sachs, which DK has hired as an adviser for the sale, is holding a tender for the asset, a third source said.
Sources had told Reuters earlier this month ION was in discussions with DK over a potential acquisition of Prelios, on which the New York-based fund has put a 1.4 billion euro ($1.44 billion) price tag.
The talks, however, are taking place at a time when tighter financial conditions amid rising interest rates have decimated buyout transactions with global dealmaking down 54 per cent annually in the third quarter.
With lenders reluctant to fund large deals, private equity buyouts face financing problems.
Founded abroad by intensely private Italian businessman Andrea Pignataro, ION entered Italy's bad loan recovery market last year when it took over Cerved, a credit data group with a bad loan division. The takeover valued Cerved at nearly 2 billion euros.
Shortly before that, ION had snatched for 1.5 billion euros Italian banking software firm Cedacri.
Outside of Italy, ION in 2019 acquired from BC Partners a controlling stake in financial information group Acuris, owner of publications Debtwire, Dealreporter and Mergermarket.
U.S. fund DK first invested in Prelios in 2017, buying other investors to take it private.
It has long been considering an exit with bankers saying that a sale would be easier to agree while still a long way away from the end of a landmark 10-year loan recovery agreement Prelios struck in 2019 with top bank Intesa Sanpaolo.
Led by former Morgan Stanley real estate banker Riccardo Serrini and chaired by Fabrizio Palenzona, who was deputy chairman at UniCredit for nearly two decades, Prelios has recently struck a partnership also with UniCredit to handle unlikely-to-pay loans.($1 = 0.9736 euros)