CBA in billion-dollar bid for embattled e-property platform

Australia’s largest bank is looking to grab a lion’s share of the country’s emerging - and potentially lucrative - monopoly electronic property transfer market in a three-way race with Asian and Canadian interests.

The battle for ownership of the new e-transfer platform Property Exchange Australia (PEXA) is unfolding as the system faces significant challenges from the country’s financial watchdog and intervention by NSW government.

Multiple potential buyers lodged indicative “trade” bids for the emerging e-transfer platform Property Exchange Australia (PEXA) early in August under a dual track sale process that also involves a potential public listing on the Australian Stock Exchange.

PEXA, run by chief executive Marcus Price, is working through a sale process. Credit: Pat Scala

The e-conveyancing platform, at this stage a monopoly player in a country which annually turns over $300 billion in property transactions, is mooted to be worth between $1.2 billion and $1.5 billion.

Australia’s two largest states are set to make e-conveyancing compulsory for all property title and mortgage transfers - shredding 150 years of paper title history this October in Victoria and by July next year in NSW.

But PEXA’s monopoly position has prompted the Australian Competition and Consumer Commission’s chief Rod Sims to warn it will investigate whether it can take action.

The ACCC has powers under the Competition and Consumer Act 2010 to facilitate third party access to significant infrastructure, known as the national access regime, a move the NSW government recently backed up by requiring e-transfer platforms operating in the state to be technology neutral, allowing rival systems equal access.

The NSW government will also cap prices on electronic property transactions.

The platform was beset with security issues after fraudsters made off with $250,000 from the home sale proceeds of Masterchef contestant Dani Venn.

PEXA and its sale adviser CLSA have whittled down potential buyers to three preferred bidders.

The e-conveyancer’s board finalised the shortlist last week with key executives set to hold a second round of financial data room meetings with the three parties in Melbourne this week.

They include a local consortium made up of ASX-listed Link Administration Holdings which has teamed up with the Commonwealth Bank and global investment heavyweight Morgan Stanley Infrastructure.

Both Link and CBA already have a part share in PEXA which they co-own with the state governments, Westpac, NAB, ANZ, Macquarie Group and rich lister and property developer Paul Little.

A successful bid by CBA will likely sharpen the focus of state and other regulators concerned about a monopoly environment.

Dani Venn with husband Chris Burgess and their children, Oscar and Harlow.Credit: Chris Hopkins

Canadian electronic property land register operator Teranet is also in the running.

It is backed by a North American pension fund, the behemoth Ontario Municipal Employees Retirement System (OMERS), sources close to the process say.

The other party in contention is pan-Asian private equity player Affinity Equity Partners which is running a bid with Citibank’s help.

PEXA is understood not to have ruled out a stock exchange listing after conducting a roadshow for investors in July. Both the trade sale and listing are “live options,” sources said.

The trade sale process will require indicative bids by the three preferred buyers to become binding by October with a final decision expected by the end of November.

PEXA will cross the $200 billion threshold in the value of property transactions settled on the platform this month. About 69 per cent of property transactions in Victoria were completed on the platform last week, with a total of 129,100 transfers conducted on the system nationally by the end of last month.

Rival platform Sympli expects to have its e-conveyancing platform up and running by the end of the year, although chief executive David Wills said lack of access to technical data standards controlled by PEXA has stymied competition.

Another company, Purcell Partners, is also pushing into the space with its LEXTECH platform.