Carlyle resumes pursuit of Australia's Link Group
The Carlyle Group has made a A$2.8 billion ($2.1 billion) buyout offer for Australia-based financial data and fund administration services provider Link Administration Holdings, six months after abandoning a joint bid for the company with Pacific Equity Partners (PEP).
The private equity firm is willing to pay the equivalent of A$5.38 per share, according to a filing. The offer comprises A$3.00 per Link share in cash plus a pro-rata distribution of the company’s interest in Pexa, a full-service electronic network for settling property transactions, valued on a look-through basis at A$2.38 per Link share.
Link’s stock closed at A$4.70, up 8.55%, on November 5, the day the offer was announced, giving the company a market capitalization of A$2.46 billion.
Carlyle and PEP submitted an offer of A$5.20 per share – a 30.3% premium to the previous close – in October 2020. This was rejected by Link. In December, SS&C Technology Holdings offered A$5.65 per share. Link said this was too low, but it granted SS&C access to conduct due diligence. SS&C withdrew in early January. Carlyle and PEP walked away at the end of April.
Had they achieved control, the private equity firms would have spun out Pexa, which processes 75% of all property transactions in Australia. Link owns 42.8% of Pexa. The company subsequently launched its own dual-track IPO and trade sale process. In May, KKR offered to buy Pexa for an enterprise value of approximately A$3 billion.
Link opted for the IPO and Pexa raised A$1.2 billion through a domestic offering in June. The company now has a market capitalization of A$2.78 billion. Its stock fell 3.27% to A$15.70 on November 5.
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. Retirement and superannuation solutions account for 44% of revenue, followed by corporate markets on 31%.
The company generated A$1.16 billion in revenue for the 12 months ended June 2020, down from A$1.23 billion the previous year. Over the same period, operating EBITDA fell from A$293.8 million to A$256.6 million, and the net loss widened from A$102.5 million to A$162.7 million.
Link acquired Pexa in 2018 with Commonwealth Bank of Australia and Morgan Stanley Infrastructure Partners. The platform has benefited from COVID-19 accelerating the structural shift to e-conveyancing. Pexa’s revenue rose 42% year-on-year to A$221 million in 2021, EBITDA was up 124% at A$101.8 million, and the net loss widened slightly to A$4.9 million.
PEP is a former owner of Link, having first invested in the business in 2005 and gone to complete several bolt-on acquisitions. The company went public in 2015 and PEP fully exited a year later.
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