Choppy ASX debut for PEXA after raising $1.17bn in IPO
PEXA Group’s first day on the ASX was choppy after the online property settlement company raised $1.17bn in one the biggest floats in Australia since 2018.
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PEXA Group’s first day on the ASX was choppy after the online property settlement company raised $1.17bn in one of the biggest float in Australia since 2018, amid a booming housing market.
The group’s subdued start as a listed company came just a few hours after the group issued an unexpected trading update, which included better than expected transaction volume figures.
In a brief statement, PEXA said property market volumes remain strong at the end of the 2021 financial year and transaction volumes through its exchange in the fourth quarter to June 30 were up 4 per cent to 960,000 from last month‘s prospectus forecast of 923,000.
June quarter volumes were up more than 48 per cent from 646,000 the same time a year ago.
PEXA, which is led by chief executive Glenn King, also confirmed an outage on Wednesday, which prevented members from logging into the platform for just under two hours until 5pm AEST.
Its shares opened at $17.00 at lunchtime Thursday, down from its initial public offer price of $17.13, and a minute later fell to an intra-day low of $16.40. The stock then jumped to a high of $17.39 before ending the trading session at $17.15 with 47.4m shares changing hands, giving it a market capitalisation of $3.04bn. The raising was only slightly behind Dalrymple Bay Infrastructure last November which raised $1.28bn, while Latitude Financial earlier this year raised $1.1bn.
PEXA’s long-awaited ASX debut comes after technology group Link rejected a $3.1bn cash offer for the group from private equity firm KKR and Nine-controlled online real estate listings company Domain Holdings Group in May.
Link’s rejection of the offer led to a big share sell-off at the time, amid investor concerns about PEXA’s lofty earnings multiple.
Investors are jittery following the share price collapse of tech group Nuix following its ASX listing last December after a string of profit warnings, executive departures and an ASIC investigation.
PEXA chairman Mark Joiner and chief executive Glenn King said they were “delighted” with the results of the IPO and support by institutional and retail investors.
“Our listing today on the ASX marks another important milestone for PEXA, as we look to explore opportunities to take our experience and expertise into new markets in Australia and internationally,” Mr Joiner said.
“After oversubscribed retail and institutional offers, PEXA lists with a strong and deep share register supported by quality long-term investors,” said Mr King, noting it’s particularly pleased with the response to the retail offer with more 3,500 Australians.
Of the capital raised, $959m will go to shareholders including Link Group, Commonwealth Bank and Morgan Stanley Infrastructure Partners. The remaining $216m will go towards PEXA’s operations including expansion to the UK.
In its prospectus, PEXA said the UK present a “sizeable opportunity” with nearly three times the volume of residential dwelling stock as the Australian market and an estimated potential market size of $719m.
PEXA has forecast revenue of $218.5m for the 2021 financial year and a 13 per cent rise to $246.9m in fiscal 2022.
It expects to book underlying earnings of $99.7m for fiscal 2021 and $107.6m in the current financial year.
Link CEO Vivek Bhatia also said the group was “very pleased” with the raising.
“Link Group will retain its significant holding in PEXA, supporting and benefiting from its future growth, while the net cash proceeds Link will receive from the process will improve the strength and flexibility of Link’s balance sheet.”
Link, which is the biggest provider of services in Australia’s superannuation administration industry, has retained a 42.8 per cent stake in PEXA, while the nation’s biggest lender, Commonwealth Bank, has increased its stake to nearly 24 per cent from 15.8 per cent. The rest of PEXA’s shareholders are institutional and retail investors.
Morgan Stanley Infrastructure Partners has sold its entire 40 per cent stake in PEXA, which shelved its initial IPO plans at the end of 2018 due to market volatility.
Originally published as Choppy ASX debut for PEXA after raising $1.17bn in IPO
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