(Bloomberg) -- Goldman Sachs Group Inc. is lining up about €2.5 billion ($2.7 billion) of debt financing for the potential sale of French biometrics and identity verification firm Idemia. 

Advent International, the private equity firm that owns Idemia, has been working with bankers to prepare the sales process and the company could fetch at least €4 billion, according to people familiar with the matter. 

Idemia is attracting initial interest from companies such as France’s Thales SA as well as investment firms including Brookfield Asset Management Ltd. and Apollo Global Management Inc., said the people, who asked not to be identified because the talks are private.

The financing will likely consist of leveraged loans and high-yield bonds, and be denominated in euros and dollars, they said. Other banks will probably look at the deal and may come with their own financing offer. 

Representatives for Goldman, Advent, Apollo, Brookfield and Thales declined to comment. Deliberations are ongoing, and there’s no certainty which suitors will proceed with bids, the people said.

A €2.5 billion package would rank as the largest staple financing in a while and be a clear signal that banks are willing to take the risk of getting behind big M&A deals. It’s more evidence that as bond prices recover in 2023, lenders are starting to return, especially for strong companies in attractive industries.

Bankers and private credit funds are already working on debt financing of up to €2 billion to back a potential sale of Viatris Inc.’s European consumer-health assets, while Ares Management Corp. is in pole position to provide as much as £1 billion ($1.2 billion) of private credit to finance a potential buyout of VetPartners.

Private credit funds have been taking advantage of the retreat of traditional lenders to expand their role. Goldman, Bank of America Corp., Morgan Stanley and other lenders were burned on buyout financing in the past year, with the industry forced to take steep losses after committing to debt they later struggled to sell on to investors. 

Wall Street’s Lucrative Leveraged-Debt Machine Is Breaking Down

Staple financing is a pre-agreed debt package chosen by the seller and provided by banks to all competing bidders during an M&A sale process. The certainty of a financing offer can make an asset more attractive to a potential buyer. 

The total debt would be about 4.5 times Idemia’s Ebitda, which bankers approximated at €550 million, the people said. That’s a relatively modest level compared with traditional jumbo leveraged buyouts that often have a debt ratio at six times or higher. 

Idemia has been majority-owned by Advent since 2017 and counts state-owned investment bank BPIFrance as a shareholder. Rothschild is also handling the sale with Goldman, the people said. A spokesperson for Rothschild declined to comment.

--With assistance from Francois de Beaupuy and Benoit Berthelot.

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