PEP-owned Link Group seeks up to $665m in Australia offering

Link Group will sell up to 162.5 million shares at A$5.41-6.37 apiece, according to a prospectus. If the offering prices at the top end of the range, the company would have a market capitalization of A$2.29 billion. It would also displace Bain Capital-owned MYOB as the largest Australian IPO of 2015.

PEP plans to sell 38 million shares, reducing its holding from 52.9% to 30.3%. Fellow investors Intermediate Capital Group (ICG) and Macquarie will offload 18.7 million shares and 9.1 million shares, respectively. They will own 10% and 4% of the listed business, while management retains 7.9%.

Link Group comprises two assets: Link Market Services (LMS), one of Australia's leading share registry companies, and AAS, which provides fund administration services to superannuation funds. PEP acquired LMS from the Australian Securities Exchange and Perpetual Trustees Australia in 2005. AAS was bought from Telstra Corp. one year later.

ICG and Macquarie acquired their combined 28.1% stake in 2013. It was reported at the time that they paid around A$200 million, with Macquarie offering part of its holding to clients as a pre-IPO placement in expectation of a listing in 2014 at a valuation in excess of A$800 million.

Over an 18-month period from May 2013, PEP refinanced the debt held by eight of 10 portfolio companies, including Link Group. The refinancing was said to have been worth A$710 million. Link Group is currently carrying A$766.3 million in senior debt and total debt of A$793.2 million. Of the latter, A$475 million will be paid down through the offering, while a new facility of A$325 million is secured.

The company administers financial ownership data for more than 2,300 clients globally, servicing an underlying stakeholder base of 10 million superannuation account holders and 20 million individual shareholders. Each year it completes 20 million transactions, processes A$70 billion in payments and receives over 4.6 million calls. The service offering is built around a technology platform that has received around A$300 million worth of investment over the last nine years.

Link Group has approximately 4,300 employees across 11 countries. Clients in Australia and New Zealand account for more than 90% of revenue. Fund administration alone is responsible for more than three quarters of revenue.

Pro forma revenue for the 2016 financial year is expected to be A$750 million, up from A$588.3 million in 2015, with net profit reaching A$59.1 million. The company projects operating EBITDA of A$181.2 million in 2016, up from A$148 million the previous year.

Private equity-backed IPOs in Australia came to a record $6.6 billion last year as 23 companies went public, 15 of which generated exit proceeds of $2.1 billion between them, according to AVCJ Research. The market has been more challenging in 2015, with five PE-backed companies raising approximately $1 billion. At $652 million, MYOB's IPO in May accounts for more than half of the total.

The Link Group offering is being led by Citi, Deutsche Bank, Macquarie Capital, and UBS.

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• Topics
• Exits
• Australasia
• Financials
• Exit
• IPO
• Australia
• Pacific Equity Partners
• Financial Services
• Intermediate Capital Asia Pacific
• Macquarie Group