Domain, KKR blow PEXA battle wide open with $3.2bn bid

The battle for Property Exchange Australia has been blown open by a $3.1bn cash bid for the lucrative property settlements platform.

Domain and KKR have blown the battle for Pexa wide open. Picture: iStock.

The battle for Property Exchange Australia has been blown open by a $3.1bn cash bid for the lucrative property settlements platform by private equity house Kohlberg Kravis Roberts and Nine-controlled Domain Holdings Group.

The aggressively structured cash offer, which is set to expire this weekend, would see the pair take out major shareholders, the listed Link Administration Holding and Morgan Stanley Infrastructure Partners, but could see the Commonwealth Bank remain invested.

The tie up between KKR and Domain, whose interest was revealed by The Australian’s DataRoom column, is making the move in an effort to pressure the boards of both PEXA and Link to quickly accede to its bid.

If the KKR/Domain move succeeded it would kill off what would be one the largest floats on the Australian Securities Exchange this year.

But Link’s board is holding firm with explorations for a listing continuing.

The trade sale process, and most recently the option of an initial public offering have garnered support, prompting the unconventional expiring offer.

The Australian’s Data Room this week reported that investment banks testing market interest for an initial public offering of PEXA were forging ahead for a potential listing next month despite recent deals being shelved due to market volatility.

Although the float market was rattled by the poor performance of the float of Pepper Money on Tuesday, with the KKR-backed float well down on its initial $1.3bn market capitalisation, and falling further on Thursday, the market is still receptive to PEXA’s growth ambitions on the back of the roaring property market.

PEXA’s advisers had been scheduling equity investor meetings for the electronic property settlements company to test interest in an IPO for at least 44 per cent of the business versus a sale.

Link, which owns the 44 per cent stake, received an earlier $2.9bn buyout proposal for the entire business from Pacific Equity Partners and The Carlyle Group.

The four IPO joint lead managers are UBS, Macquarie Capital, Morgan Stanley and Barrenjoey Capital with some existing shareholders in Link also prepared to cornerstone the offer in the expectation of further windfall gains.

Link last night confirmed it had received the offer from KKR as part of the trade sale for its 44 per cent interest in PEXA.

The proposal represents an enterprise value for all of PEXA of $3 billion plus cash on the balance sheet, with the bidder noting at the end of March this stood at $126 million.

The proposal is conditional on agreement on transaction documentation, including a sale and purchase agreement, Foreign Investment Review Board approval and relevant approvals from the state land registries.

Most critically it also depends on an agreement by PEXA shareholders to the IPO not going ahead.

KKR advised that the proposal remains open and capable of acceptance until 5:00pm on Sunday.

KKR also advised that Domain is expected to partner with KKR but the company is yet to comment.

Link said the proposal had been received in advance of the timing on the trade sale process timetable.

“The Link Group Board is considering the Proposal, including obtaining advice from its financial and legal advisers. As no decision has been made, both the trade sale process and exploration of the viability of an IPO continue to proceed,” the company said in a statement.

Link’s board said it would “continue to act in the best interests of the company and seek to maximise the value of its PEXA investment”.

Originally published as Domain, KKR blow PEXA battle wide open with $3.2bn bid