PEXA travelling towards $3.3bn float in June

Link Group, which owns a 44.1 per cent interest in PEXA holding company Torrens Group Holdings, confirmed on Monday (31 May) that it had signed an underwriting agreement for the purposes of a proposed initial public offering (IPO) of the property platform, with an implied value of $3.3 billion.

Link is exploring increasing its stake in PEXA from 44 per cent to around 47 per cent. The parent company is expecting to receive a minimum of $50 million in cash as a result from the IPO.

The proposed IPO has an expected ASX listing date towards the end of June, subject to ASX admission requirements.

The implied $3.3 billion valuation of PEXA alone is notable, after Link’s board insisted that a $2.9-billion takeover offer it fielded in October for the entire Link Group substantially undervalued it.

The offer had come from a consortium of private equity firms, including Pacific Equity Partners and Carlyle Group, and it had revised its offer multiple times through 2020 before withdrawing earlier this year.

Vivek Bhatia, chief executive and managing director of Link, revealed that the latest $3.3-billion figure represented an approximate surge of 70 per cent on the consortium’s implied value for PEXA of $1.95 billion. 

Link also had similarly contested an offer from US technology group SS&C Technology, received late last year.

The company board had unanimously decided that retaining exposure to PEXA while realising a transparent valuation through a listing and flexibility to monetise the shareholding over time was in the best interests of shareholders.

“This is an outstanding outcome for the shareholders of Link Group,” Mr Bhatia declared.

On Thursday (27 May), Link also confirmed that it had been chased by private equity firm Kohlberg Kravis Roberts & Co (KKR), who was planning to partner with Domain in a bid for the company’s 44.1 per cent share of PEXA.

The offer valued PEXA at $3 billion plus cash on the balance sheet as at date of settlement, noting that cash on the balance sheet as at 31 March was $126 million.

But KKR’s offer closed on Sunday evening.

Link initially signalled it was considering listing PEXA in February, after the platform doubled its earnings in the six months to December, to $51.5 million. All of the platform’s shareholders (CBA and Morgan Stanley Infrastructure Partners, in addition to Link) had agreed to considering the float.

PEXA produced a total revenue of $218 million in the 2020 financial year, a 39 per cent rise on the year prior.

The settlement platform has a transfer market share of 98 per cent in Victoria, 96 per cent in NSW, 95 per cent in South Australia, 80 per cent in Western Australia and 60 per cent in Queensland, according to Link.

PEXA is also seeking to grow in three areas, internationally, in an offshore markets business – through its insights offering, using property data from the PEXA Exchange; and through PEXA Ventures, its incubator for new businesses across the property sector.

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