BGH, Sixth Street's PushPay buyout bid set to fall short

The company’s board approved a scheme of implementation last October whereby the private equity firms would acquire all outstanding shares for NZD 1.34 apiece. This represents a 30.1% premium to the closing price on April 22 – when the pursuit of PushPay became public – and a multiple of 16.7x, based on projected underlying EBITDA for the 2023 financial year.

Two thresholds must be satisfied for the scheme to be approved: more than 50% of PushPay’s total outstanding shares should vote in favour; and at least 75% of the votes in each interest class (there are two interest classes: associates of BGH and Sixth Street; and all other shareholders).

BGH and Sixth Street – the former was established by the former Asia managing partner of TPG Capital, the latter is a credit and special situations spinout from TPG Capital – already own 20.34% of PushPay. BGH often accumulates equity positions in listed companies prior to making buyout offers because it makes for a stronger negotiating position and can help block rival bidders.

Proxy votes have been received amounting to 80% of all shares on issue. The first threshold was satisfied with 54% of all votes cast in favour of the scheme. The second was not. Only 56% of shareholders outside of the BGH and Sixth Street group support the deal, according to a filing.

PushPay’s stock dropped as low as NZD 1.07 in late September and rallied to around NZD 1.30 when the scheme of implementation won board approval in October. It traded fairly evenly until mid-February as indications emerged that shareholders would not support the deal. The stock closed at NZD 1.27 on March 3, down 2.31% for the month.

Founded in 2011, Pushpay offers a suite of donor tools, finance tools, a community app, and a church management system (ChMS). It primarily works with religious, educational, and non-profit organisations, simplifying community engagement, the tracking of online donations, and administrative functions. Most of the company’s revenue comes from the US.

As of March 2022, the company had 14,500 customers and had processed USD 7.6bn in online donations over the prior 12 months, up from USD 6.9bn in 2021. Operating revenue rose from USD 179.1m to USD 202.8m, of which 67% came from transaction processing and 30% came from subscriptions. Net profit increased from USD 31.2m to USD 33.4m.

The company estimates that the total addressable market in the US faith sector, including donor and church management platforms, is up to USD 2.5bn. The Catholic church segment, which Pushpay started targeting last year, accounts for USD 600m to USD 700m.

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• Topics
• Australasia
• Financials
• Buyouts
• Technology
• New Zealand
• BGH Capital