Impending PEXA acquisition valued at $1.6bn

The majority of PEXA’s shareholders have supported a joint proposal by the Commonwealth Bank of Australia (CBA), Morgan Stanley Infrastructure Partners, and Link Administration Holdings to acquire the electronic property exchange network.

The consortium had on 8 October 2018 presented its takeover offer to PEXA, whose existing shareholders include the state governments of New South Wales, Queensland, Western Australia and Victoria, as well as the big four banks, the Australian Securities Exchange, Macquarie Capital, Little Group, and Link.

Link said that the consortium would pay “an enterprise value of up to approximately $1.6 billion, depending on the level of final acceptances to the trade sale offer received by PEXA’s shareholders”.

The IT solutions provider added that its stake in PEXA would increase from 19.8 per cent to between 27 per cent and 44 per cent.

As part of the transaction, Commonwealth Bank said that it would inject an additional $50 million into PEXA, taking its total investment in the property exchange network to $100 million.

On completion of the acquisition, which is subject to a number of conditions precedent, the major bank’s stake will increase from 13.1 per cent to about 16 per cent.

Speaking of the rationale behind the impending takeover, CBA chief executive Matt Comyn said: “Having been a key stakeholder in PEXA since its inception in 2011, today’s announcement represents our continued commitment to support the property industry as it transitions towards an innovative, fully digital settlements process that aims to provide improved experiences for customers.”

It will reportedly take about two to three months for the conditions to be met before the deal can progress, according to co-bidder Link.

Approximately $237 billion worth of property value has been successfully transacted via PEXA since it was created in 2010 out of a Council of Australian Governments agenda item to digitise property conveyancing.

However, earlier this year, the company also faced scrutiny for its unintended involvement in two security breaches, one of which resulted in hackers stealing $250,000 from the sale of former MasterChef contestant Dani Venn’s property by diverting the settlement funds into a fraudulent bank account. The culprit had reportedly gained unauthorised access to a conveyancer’s email account and used it to reset the password for a PEXA account.

The fraud case prompted PEXA to boost security by rolling out multifactor authentication, anomaly detection, account activity timestamps, and the ability to create new users in an “inactive” mode, meaning that only PEXA can activate new users on behalf of its clients after confirming the new user with them.

[Related: ASX invests in e-conveyancing venture]