Property Exchange Australia may brave the intensely volatile market conditions and head to the Australian Securities Exchange as a company priced between $1.8 billion and $2bn after a lower bid for the business by Link Group and its backers was rebuffed.
It is understood that Link Group, Morgan Stanley Infrastructure and the Commonwealth Bank of Australia offered between $1.3 billion and $1.6 billion for the electronic settlements company when final bids were due in recent days.
The Link Group consortium was the only party that made a final offer for PEXA, which at the same time was considering an IPO, and the expectation was always that PEXA would be acquired by Link.
However, PEXA’S advisers at Morgan Stanley and Macquarie Group are understood to have made presentations to the company yesterday saying they can achieve a price of between $1.8bn and $2bn if the business is floated.
As a result, PEXA is understood to have rejected Link’s offer – believed to be between $1.3bn and $1.8bn.
The likelihood is that the size of the initial public offering for PEXA is between 20 per cent and 30 per cent.
The move to opt for an IPO by PEXA comes amid a major fallout in global equities, with Wall Street falling a further 2 per cent overnight on the back of higher interest rates, trade wars and a sell-off in technology stocks.
Yesterday, Australia’s S&P/ASX 200 index fell 2.7 per cent to a five-month low.
A number of the technology stocks on the ASX have fallen as much as 20 per cent in the past week, leaving some to question how a listing of PEXA will be possible in the current environment.
Fund managers have been on one level eager to invest in PEXA, but are wary about the fact that the group is yet to turn a profit and believe that analyst valuations for the business are beyond what they are prepared to pay.
Morgan Stanley analysts earlier said PEXA was worth between $1.6bn and $2.3bn.
Link has been advised by JPMorgan in a dual track sales process to buy PEXA, of which it already owns about 20 per cent.
Macquarie is PEXA’s largest shareholder with 23.9 per cent of the company, while the NSW, Victorian, Queensland and West Australian governments own about 30 per cent.
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