Online property conveyor PEXA readies for $2b float

Online property settlements exchange PEXA is preparing for what could be Australia’s biggest tech float after the board rejected a takeover offer last week from a consortium led by one of its major shareholders, Link Administration Holdings.

Link announced to the ASX on Tuesday that it expects to sell nearly half its stake in PEXA if the initial public offering (IPO) goes ahead.

Melbourne businessman and PEXA investor Paul Little. Credit: Ken Irwin

Link co-owns PEXA along with state governments, Commonwealth Bank, Westpac, National Australia Bank, ANZ, Macquarie Group and rich lister and property developer Paul Little.

PEXA plans to raise $680 million to $750 million from institutional and retail investors.

Less than $80 million will actually go to the business, with the rest being paid to current investors, like Link, who are opting to sell down their investment or sell out altogether.

Link plans to sell 12.5 million shares in the float and said it expected the proceeds to be “in excess of $165 million” but will still own a 10 per cent stake after the float.

CBA, which was part of Link's consortium seeking to acquire PEXA, will not sell any of its shares in the float, according to briefings given to potential institutional investors on Tuesday.

Neither will Mr Little, a former Toll Holdings boss and former Essendon Football Club chairman.

NAB, Westpac and ANZ are expected to sell all their PEXA shares. Macquarie Group will remain PEXA's largest shareholder with a 20 per cent stake after selling some shares.

The governments of NSW, Queensland and Western Australian are expected to sell all of their shares into the float, while Victoria will retain a stake.

According to presentations made to institutional investors, PEXA will be valued at up to $2.2 billion, with its shares expected to fetch as much as $15.80 each. A bookbuild starts on Wednesday, which will help the brokers, Macquarie Capital and Morgan Stanley, determine a sale price for the shares. A prospectus is then expected to be lodged on Friday for retail investors.

The IPO is expected to be the biggest tech raising conducted so far in Australia.

The biggest ASX tech float last year, Credible, raised $68 million. In 2016, Wisetech Global raised $170 million. Atlassian’s Nasdaq listing in December 2015 raised $US462 million.

PEXA's is investing heavily in technology to move the $300 billion paper-driven property conveyancing industry online, describing itself as “Australia’s first and only operational online property lodgement and settlement network”.

The Australian Competition and Consumer Commission (ACCC) has warned that the push in Victoria and NSW to move all conveyancing online would create a monopoly. Victoria ended 150 years of paper title history this month and NSW plans to follow suit by July next year.

It's not PEXA's only problem.

In June, fraudsters stole $250,000 from the home sale of MasterChef finalist Dani Venn.Credit: Chris Hopkins

It scrambled to upgrade security standards after a breach of its system in June enabled fraudsters to steal $250,000 from the home sale of MasterChef finalist Dani Venn.

The PEXA listing will also face a challenging market environment with the highly priced tech stocks, both locally and overseas, getting caught in the downdraught of concerns that include overvaluation.

And PEXA investors will be asking to pay up for a company that is still making significant losses.

For the financial year ending June 30, PEXA reported that revenue more than doubled to $38.9 million while losses more than halved to $34.7 million, from $79.3 million the prior year.

The prior year result included a $28.8 million cash bonus payout to senior executives.