PEXA chooses $ 3.3 billion stock list over cash on hand
It is understood that KKR, Domain and other potential bidders, including Canada’s Dye & Durham, has learned that the commercial sale process – which was being conducted alongside another process exploring a possible IPO – has been halted.
The float move has won the support of some of Link’s major shareholders, including Yarra Capital Management with a 6.8 percent stake, who wish to participate in PEXA’s future growth.
Yarra executive chairman Dion Hershan said that since the price on the table was similar for both the sale and the IPO, Yarra – who helped build the PEXA book – preferred the IPO.
“It is a scalable digital company with a dominant position in the market,” Hershan told the Financial analysis. “It’s a high quality business in any measure.”
But other Link shareholders are lukewarm about the decision to float.
“We would rather they take cash, pay off some of their debts and give themselves some firepower to work on the core business,” said one institutional investor.
“I don’t see how increasing your stake in PEXA to 30x EBITDA unlocks value on behalf of shareholders.”
Link’s share price, which traded at $ 4.79 12 months ago, closed at $ 5.45 on Friday. The IPO will value PEXA at 30.6 times the EBITDA forecast for the 2021-2022 fiscal year.
Private equity groups Carlyle and Pacific Equity Partners made an indicative offer of $ 5.20 per share for Link in October, then increased it to $ 5.40, but withdrew it after the appearance of higher bids.
Link chief executive Vivek Bhatia said in April the group had an “open mind” about whether a commercial sale or an IPO was the best option.
A prospectus on the PEXA float is expected to be published in mid-June.
Link’s third-largest shareholder, the Commonwealth Bank of Australia, will increase its holdings from around 15 percent to over 17 percent as part of the IPO, while Link’s holdings will also increase slightly.
PEXA, which generates fees related to handling transfers, mortgages and mortgage payment in Victoria, NSW, Queensland, SA and WA, has been the fastest growing part of Link’s business. fast.
Its electronic transfer platform handles over 80% of all real estate transactions in Australia. The group wants to be at the forefront of a similar modernization of systems in Great Britain, New Zealand and Canada.
He is preparing to move to Britain to try to emulate the big shift towards digital ownership transfer he pioneered in Australia and is in active discussions with several lenders in the UK.
PEXA signed an agreement with global software consultancy ThoughtWorks in late April to help it grow in Britain.