PEP, Carlyle end pursuit of Australia's Link

The two private equity firms submitted a joint offer of A$5.20 per share – a 30.3% premium to the previous close – in October 2020. Link rejected the offer, saying the valuation was too low. In December, SS&C Technology Holdings offered A$5.65 per share. Link once again argued that the offer undervalued the company but granted SS&C access to conduct due diligence. SS&C withdrew in early January.

Link confirmed in an April 28 filing that PEP and Carlyle had withdrawn their proposal. Separate filings indicated that the private equity firms had divested a 12.5% position in Link. Link’s stock fell 6% to close at A$4.97 on April 28 in response to the news. It staged a modest recovering the following day, ending trading at A$5.09.

Had they achieved control, PEP and Carlyle would have spun out Pexa, Australia’s first and only full-service electronic network for settling property transactions, in which Link holds a 44.2% interest. Link subsequently launched its own dual-track IPO and trade sale process. It claims the trade sale process has elicited expressions of interest at a higher valuation than the A$1.95 billion proposed by PEP and Carlyle.

PEP has a long history with Link, having first invested in the business in 2005, when it bought share registry Link Market Services from Australian Securities Exchange and Perpetual Trustees Australia for A$132 million. The company acquired the second component of Link Group, fund administration services provider AAS, from Telstra Corporation in 2006, paying A$215 million.

PEP sold a minority stake in the business to Intermediate Capital Group and Macquarie for around A$200 million and then realized proceeds of A$242 million from Link’s IPO in 2015. The private equity firm completed its exit a year later, with proceeds from the public market sales alone totaling approximately A$1.15 billion. It also completed several dividend recaps.

Link manages financial ownership data for more than 6,000 clients worldwide, handling administration, data processing, reporting and analysis for pension and superannuation funds, corporates, and fund managers.

The company generated A$1.23 billion in revenue for the 12 months ended June 2020, down from A$1.4 billion the previous year. Retirement and superannuation solutions account for 33% of revenue, followed by corporate markets on 23%. Over the same period, operating EBITDA fell from A$395 million to A$294 million and Link swung from a net profit of A$318.1 million to a net loss of A$113.9 million.

For the six months ended December 2020, revenue fell 3% year-on-year to A$597 million. EBITDA and net profit came to A$79.1 million and A$31.3 million, respectively, down 15% and up 10%.

Link acquired Pexa in 2018 with Commonwealth Bank of Australia and Morgan Stanley Infrastructure Partners. The platform, which processes 75% of all property transactions in Australia, has benefited from COVID-19 accelerating the structural shift to e-conveyancing. In the six months to December, revenue rose 27% year-on-year to A$99 million and operating EBITDA jumped 90% to A$51 million.

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• Topics
• Australasia
• Buyouts
• Financials
• Australia
• Financial Services
• Pacific Equity Partners
• The Carlyle Group