Hopes are starting to fade that a firm bid will emerge from Pacific Equity Partners and The Carlyle Group for Link Administration Holdings, with time dragging on since the private equity groups were initially granted due diligence to complete their proposal.
That was back in October, and with a sales process now ramping up for Link’s 44 per cent interest in Property Exchange Australia, some doubt is surfacing that the buyout funds will offer a price high enough to satisfy the board.
Their earlier $5.40 per share bid, which was lifted from an initial offer of $5.20, was not enough to get backing from Link’s board to recommend a deal, but it was enough to get the suitors due diligence access.
However, some think that bidders vying for the PEXA stake will likely offer more than PEP and Carlyle will put forward for that part of the business.
The pair put an equity value on the interest of about $900m.
As part of their bid, investors in Link had the option to retain the PEXA stake and receive $3.80 per share cash for Link’s other operations, including its superannuation administration and share registry services.
The PEP and Carlyle bid values the entire company at $2.9bn.
PEXA is Australia’s first and only full service electronic lodgement network operator.
Its core product is the PEXA exchange, which provides integration with land titles offices and state revenue offices, electronic lodgement services and near real-time settlement of funds via the Reserve Bank.
While the sales process for the PEXA interest is yet to get going in earnest, the Nine Entertainment-backed Domain group plans to enter the contest, along with Kohlberg Kravis Roberts, advised by Jefferies and Partners Group, which has JPMorgan in its corner.
Nine typically calls on investment banking services of Jefferies, which may suggest that Domain, which is 60 per cent owned by Nine, competes for PEXA as part of a consortium with KKR.
After all, there are questions as to how Domain, with a $2.9bn market value, would fund an acquisition.
Domain, an online real estate listings business, has emerged as an interested buyer of the Link stake after chief executive Jason Pellegrino was pressed on speculation about an upcoming corporate deal while delivering results.
However, buyers will likely face strong competition from Macquarie Infrastrucutre and Real Assets, which some say is best placed to buy the business given its existing ownership of land titles offices in Australia.
Flyers for the sale of the PEXA stake have been sent to buyers and the process is expected to start shortly.
PEXA’s earnings before interest, tax, depreciation and amortisation were $58m for the year to June, while it generated $155m of revenue for the same period.
Other owners include Morgan Stanley Infrastructure and the Commonwealth Bank of Australia.
Advising Link is UBS, while PEXA has been working with Investec.
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