KKR bids for Australia conveyancing business
KKR is seeking to become the largest shareholder in Pexa, an Australia-based electronic settlement network for property deals, having offered to take out Link Administration Holdings at an enterprise valuation of A$3 billion ($2.3 billion).
The private equity firm expects Domain Group, best known as the operator of real estate portal domain.com.au, to come in as its partner in the deal, Link said in a filing.
Link acquired Pexa – which processes 75% of all property transactions in Australia – in 2018 with Commonwealth Bank of Australia (CBA) and Morgan Stanley Infrastructure Partners. All three are still investors in the business, with Link holding a 44.18% stake, Morgan Stanley 40%, and CBA 15.8%. Link launched a dual-track IPO and trade sale process earlier this year.
Link was itself recently a PE target. Pacific Equity Partners (PEP) and The Carlyle Group submitted a A$2.7 billion ($1.97 billion) bid last October. It was rejected and then withdrawn last month. The PEP and Carlyle proposal included spinning out Pexa at a A$1.95 billion valuation. This prompted Link to launch a process, which it claimed had elicited expressions of interest at a higher valuation.
Link manages financial ownership data for pension and superannuation funds, corporates, and fund managers. Pexa is Australia's only property-focused, full-service electronic conveyancing network, offering near real-time tracking on property settlements. It facilitates more than 20,000 home sales every week – working with 150 financial institutions and 8,900 legal and conveyancing firms.
The company has benefited from COVID-19 accelerating the structural shift to e-conveyancing. As of June 2020, Pexa had processed 5.4 million transactions to date – of 2.4 million closed in the 2020 financial year and 1.75 million in the 12 months before that – worth a combined A$907 billion. It receives a fee on each one.
Revenue for the 12 months ended June 2020 was A$155.6 million, up from A$109.1 million the previous year. Operating EBITDA and operating net profit were A$57.9 million and A$53.4 million, respectively, up 778% and 1,087% year-on-year.
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