(Bloomberg) -- Thoma Bravo, the tech-focused private equity firm, has approached banking software specialist Temenos AG about a potential takeover, people with knowledge of the matter said.

The buyout firm has held initial discussions with Geneva-based Temenos to express its interest in a deal, the people said, asking not to be identified because the information is private. Shares of Temenos have fallen 34% this year, giving the Swiss company a market value of about 6.2 billion francs ($6.4 billion). 

While Temenos has long been seen as a potential takeover target, reaching a deal could prove challenging due to the company’s high valuation expectations, the people said. The dealmaking environment has also started to get more difficult for private equity firms amid rising financing costs. 

Bloomberg News first reported in October that Temenos was attracting interest from Thoma Bravo as well as EQT. Deliberations are ongoing, and there’s no certainty Thoma Bravo and Temenos will be able to agree on terms of a transaction, the people said. 

Representatives for Thoma Bravo and Temenos declined to comment.

Investment firms flush with cash have been hunting for beaten-down growth plays that have fallen out of favor with stock market investors. The value of private equity deals targeting European companies has nearly doubled this year to $159 billion, according to data compiled by Bloomberg. 

Thoma Bravo is known for favoring software companies with recurring revenue from subscriptions. It’s lately been scoping out targets in Europe, where it’s studied potential deals for German technology provider Software AG as well as enterprise software developer SUSE SA, Bloomberg News has reported.

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