Link Administration Holdings (ASX: LNK) Confirm PEXA Listing for June

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Link Administration Holdings (ASX: LNK) Confirm PEXA Listing for June

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  • Link have confirm PEXA IPO for the end of June.
  • The IPO value represents $3.3 billion fully underwritten.
  • Links, CEO labelled the listing as an "outstanding success."

Link Administration Holdings (ASX: LNK) have today provided an update to the ASX on the listing of PEXA as a separate entity on the ASX. PEXA is a digital settlements provider allowing the quick and easy exchange of property in Australia.

Previously on the 25th of May, Link provided an update on the current trading conditions being experienced by the company, where it indicated strong growth in market share and upgraded growth forecasts. Strong property transaction values and higher PEXA Exchange values have caused the company to forecast a $4.2 million increase in transactions in FY21.

Over the next 12 months following their listing, the company has also indicated a range of growth opportunities that include growing PEXI international in offshore markets while also identifying and accelerating new business ventures with consumers, businesses, and governments. Internationally the company is looking to potentially launch a re-mortgaging solution in England and Wales.

Not long after this business update, Link then received a takeover proposal from Kohlberg Kravis Roberts & Co, looking to acquire 100 per cent of PEXA for $3 billion-plus cash on the balance sheet. This proposal was conditional on other transaction agreements, foreign investment review board approval and Furter action by PEXA shareholders. Link at the time indicated it was in the process of considering the proposal made.

Today Link confirmed the intention for PEXA to be listed as a separate entity with an Initial public offering (IPO) price of $3.3 billion fully underwritten. The IPO will take place towards the end of June, conditional on meeting ASX requirements.

The Chief Executive Officer (CEO) and Managing Director of Link Group, Vivek Bhatia, labelled the announcement as an "outstanding success." A previously implied valuation of PEXA of $1.95 billion, including a variety of other bids, represent a significant undervaluation against the IPO value.

Despite the seemingly positive nature of the announcement, Link shares have opened 0.5 per cent lower today at $5.42 per share. Shares of the company are still trading 9 per cent higher year to date but remain some 42 per cent below all-time highs in late 2017.

A range of significant institutions see upside in Link Administration holdings with Ord Minnett, Credit Suisse and Citi all with a target price above the current share price.  In particular, Citi see's "valuation appeal" in particular of their ownership in PEXA. Moving forward the successful listing of PEXA remains essential for Links success; otherwise general business conditions remain strong. The next confirmed provision of financial results will occur on the 26th of August 2021.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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