Link Administration and its partners have rejected a A$3.1bn (€1.96bn) bid from KKR for Property Exchange Australia (PEXA), opting instead to list the company at an enterprise valuation of A$3.3bn.
The PEXA board decided to proceed with a listing, scheduled for later this month after a bookbuild process to test the appetite of investors against the value of KKR’s cash offer.
Link, which runs share registries and superannuation administration businesses, said it would lift its stake in PEXA to 47% from 44%.
This provides for Morgan Stanley Infrastructure Partners, PEXA’s second-biggest shareholder with a 40% stake, to sell its entire stake as part of a float underwritten by four investment banks.
A third shareholder, Commonwealth Bank of Australia, will lift its stake from around 13% to 17% in the listed property settlement platform.
Link Group’s CEO and managing director, Vivek Bhatia, said the Link board unanimously concluded that retaining exposure to Link Group’s interest in PEXA, while also realising a transparent valuation through a listing, with flexibility to monetise its interest over time, was in the best interests of shareholders.
“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,” he said.
Bhatia was referring to a A$2.9bn bid from a consortium led by the Carlyle Group and Pacific Equity Partners.
“This (undervaluation) has now been demonstrated through the book build undertaken on Friday, valuing PEXA at A$3.3bn, and representing an increase of approximately 70% on the consortium’s implied valuation of PEXA at $1.95bn,” said Bhatia.
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