KKR, Domain lob surprise $3b bid for PEXA
Private equity heavyweight KKR and Domain Holdings have teamed up to lob a surprise $3 billion bid for the online property conveyancer PEXA, asking its owners to either accept or reject the bid by this Sunday.
Link Administration, which is the largest shareholder in PEXA with a 44.2 per cent stake, confirmed the offer Thursday evening giving PEXA an enterprise value (which includes debt) of $3 billion. The KKR/Domain bid also stipulates that Link pull the pin on its plans to list PEXA on the ASX.
Link, which is exploring a sale either to private buyers or via in initial public offering, said it is considering the proposal.
“As no decision has been made, both the trade sale process and exploration of the viability an IPO continue to proceed,” it said.
The Link announcement said Domain, the real estate listings portal that is 60 per cent owned by Nine Entertainment Co – owner of The Sydney Morning Herald and The Age, is expected to partner with KKR on the deal.
Australia’s largest property conveyancer is subject to a multi billion dollar offer from property listings portal Domain and private equity group KKR. Credit:Peter Rae
Link Administration is the largest shareholder in PEXA. Morgan Stanley Infrastructure Partners holds 40 per cent and Commonwealth Bank of Australia has a 15.8 per cent stake.
Link triggered a dual-track sales process for its PEXA stake in February, with a decision expected next month on whether it would accept a trade sale for its stake, or if PEXA would proceed to an IPO which was expected to value it at up to $3 billion.
The company released the financial forecasts for PEXA this week, ahead of the information being put out to potential institutional investors interested in the IPO.
It reported that PEXA’s revenue is expected to hit $218 million for the financial year ending June 30, 2021 and $247 million for 2022.
The disclosure also says its EBITDA (earnings before interest, tax, depreciation and amortisation) margins for these two financial years will be roughly in line with what Link reported in its February half year results, when it announced its stake in PEXA was on the block.
According to Link, PEXA generated operating EBITDA of $51.5 million on revenue of $99 million for the half year.
PEXA last attempted a float in 2018 but a global sharemarket sell-off killed the proposed float that valued it at $2.2 billion. It was subsequently sold to its current owners for $1.6 billion.
The platform was making a loss at that time, but investors expected it to profit as the $300 billion paper-driven property conveyancing industry moves online.
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