Australian digital property settlement company PEXA is heading for an initial public offering on the domestic stock exchange towards the end of June, its top shareholder Link Group said in a disclosure on Monday.
Link said an underwriting agreement for the proposed IPO on the Australian Securities Exchange (ASX) has been signed, implying an enterprise value of A$3.3 billion ($2.55 billion) for PEXA.
The planned IPO, following a cornerstone bookbuild process, has put an end to Link’s previous plans to sell a 44% stake in the property firm. The proposed trade sale had drawn a buyout offer from KKR and real estate technology and services firm Domain Holdings Australia that valued PEXA at A$3 billion.
“Prior to any scale back from this process, Link Group’s shareholding in PEXA will increase marginally from 44% to approximately 47%. Link Group will receive a minimum of $50 million in cash as a result of the IPO process, plus any proceeds received through the scale back,” Link said in its announcement.
The IPO could be the largest on ASX since 2019, according to local media reports.
Morgan Stanley Infrastructure Partners and Commonwealth Bank of Australia own the remaining shares of PEXA. According to local media reports, Morgan Stanley will divest its 40% stake in PEXA.
The proposed IPO “is an outstanding outcome for the shareholders of Link Group,” said its CEO and managing director Vivek Bhatia.
“In October 2020, the Link Group Board considered that the private equity consortium’s bid for Link Group, including its interest in PEXA, significantly undervalued Link Group’s business including the PEXA asset. This has been now demonstrated through the book build undertaken on Friday valuing PEXA at A$3.3 billion, representing an increase of approximately 70% on the consortium’s implied valuation of PEXA at A$1.95 billion,” he added.
A consortium led by Pacific Equity Partners and Carlyle Group then proposed to acquire 100% of the shares in Link Group, but the consortium announced its withdrawal last month.
Link Group had earlier planned a separation of its interest in PEXA, as well as a demerger into a separate ASX-listed entity. In February this year, Link Group said it will prioritise a trade sale process.
PEXA reported a 90% y-o-y increase in operating EBITDA to A$51.5 million in the first half of the financial year. Transaction volumes rose by 28% to 1.53 million. As of March 31, 2021, the business estimated substantial transfer market share in Victoria (98%), New South Wales (96%), South Australia (95%), Western Australia (80%) and Queensland (60%). A total potential addressable market opportunity for the PEXA Exchange in Australia will be approximately A$280 million for the calendar year 2021, it added.