From the AFR last night, 30th April, 9:34pm:

Street Talk

Carlyle, amicaa JV in talks with Potentia on Tyro takeover finance

The Carlyle Group and its local joint venture partner amicaa are understood to be in discussions to finance Potentia Capital’s long-awaited bid for Tyro Payments even as price negotiations drag on.

Street Talk understands the private-debt JV has gone through a few rounds of talks with Potentia, keen to see if it could cut a cheque. It has kept the talks alive despite radio silence from the bidder and the target regarding negotiations.

Sources said the Carlyle-amicaa team wanted to take up as much of the Tyro takeover debt finance stack as it could get its hands on, but Potentia had kept its options open and was talking to two other lenders.

The talks show the PE investor hasn’t lost its interest in Tyro Payments even though it fired its opening salvo at $1.27 a share nearly eight months ago, in September.

It followed up with another rejected $1.60 bid in December, but finally got four-weeks due diligence in late January, as Tyro’s biggest investor Mike Cannon-Brookes’ Grok nudged the board to engage. Price expectations for the new bid have been in the $1.75 to $1.80 range.

Sources said talks between Tyro and Potentia had finally graduated from combative territory to a friendlier terrain, but the bidder was yet to table a new bid. The two camps were churning through the nitty-gritty of the scheme implementation deed and what to do with Tyro’s banking licence.

Tyro’s authorised deposit-taking licence deal means Potentia would need to secure Australian Prudential Regulation Authority approval for its bid. But the PE firm is unlikely to want to keep the capital-soaking ADI.

Sources reckon the PE firm will likely sell the banking licence to a third party and strike an agreement to cross-sell the latter’s financial products to Tyro customers for a cut of its margin – or it could just return the ADI to APRA.

Tyro shares haven’t traded above the $1.60 levels – the same as the rejected bid – since April 6, so Caryle and amicaa’s sighting in the Potentia tent is a glimmer of hope for its shareholders.

Should the duo secure a spot in the Tyro takeover debt stack, it would be the first deal Street Talk has seen them set up since the JV began in August.

It previously looked at financing an overseas bolt-on acquisition for Summer Hill-based audio equipment giant Rode, but that deal was put on hold.