PEXA to go it alone with $3.3bn listing

The rapidly growing electronic settlements platform could now become one of the largest floats on the ASX this year.

Link this week confirmed it had received an offer for PEXA

The aggressive move by private equity giant Kohlberg Kravis Roberts and Nine-controlled Domain Holdings Group in lobbing a $3.1 billion takeover for Property Exchange Australia could have backfired with the company running a quick fire book build on Friday that garnered bids valuing the company at $3.3 billion.

The rapidly growing electronic settlements platform could now become one of the largest floats on the ASX this year despite the rocky state of equity markets as its business is growing on the back of the residential property boom.

The company was dramatically forced into play this week when the private equity group and the real estate listings company logged their expiring bid in an attempt to derail the listing.

They made an exploding offer which expires on Sunday evening, priced at $3 billion and $126 million worth of cash on the PEXA balance sheet at the end of March.

The aggressively structured cash offer 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, made the move in an effort to pressure the boards of both PEXA and Link to quickly accede to its bid.

But this only appears to have spurred the group’s heavyweight crew of prospective underwriters into action.

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.

They have run a sounding process with big institutions committing to a float which would see PEXA raise $910 million.

The price at which the funds would be raised is ahead of the KKR and Domain bid and shows a lofty forward earnings multiple of 26.1 times forecast earnings next financial year.

The hefty demand from institutions throws into doubt the effectiveness of seeking to overthrow the dual track sales process.

Late Friday the owner of PEXA, Torrens Group Holdings Pty and its shareholders, offered about 68.7 million shares at $17.13 each.

The company would offer $216m worth of fresh shares, while the existing shareholders would offload $961m worth of shares, with the bulk of this made up of Morgan Stanley Infrastructure Partners exiting.

Link’s holding would drop to 42.1 per cent from 42.6 per cent.

There is also interest from a rival trade bidder in the form of Canadian firm Dye & Durham which has been chasing the PEXA operation, which again points to its growth prospects.

Domain confirmed on Friday it would partner with KKR and would end up with a 10 per cent stake in PEXA if that bid went ahead.

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

The Australian’s DataRoom column 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.

Link received an earlier $2.9bn buyout proposal for the entire business from Pacific Equity Partners and The Carlyle Group.