The Link Administration Holdings Ltd (ASX: LNK) share price is up today after getting an offer for PEXA from KKR.
What’s happening?
Link confirmed this morning that it has received an offer from the private equity group KKR as part of the previously announced trade sale for Link’s 44.18% share of PEXA.
What’s PEXA? It provides a world-first, digital settlements. PEXA helps over 20,000 families a week safely settle their homes. It has a high market share in many Australian states: Victoria (98%), New South Wales (96%), South Australia (95%), Western Australia (80%) and Queensland (60%).
PEXA believes that the total addressable market opportunity for the PEXA Exchange in Australia will be approximately $280 million in the 2021 calendar year. It also has international growth plans. PEXA International is working towards potentially launching an initial re-mortgaging solution in 2022 in England and Wales.
What is the PEXA offer?
The proposal represents an enterprise value for 100% of PEXA at $3 billion plus cash on the balance sheet as at the date of settlement. Cash on the balance sheet at 31 March 2021 was $126 million.
There are some conditions, such as regulatory approval and a number of agreements by PEXA and its shareholders such as the IPO not proceeding.
KKR said its proposal can be accepted until 5pm on Sunday, 30 May 2021. KKR also advised that Domain Holdings Australia Ltd (ASX: DHG) is expected to partner with KKR.
Link’s response
The Link board is considering the proposal, including obtaining advice from its financial and legal advisors. As no decision has been made, both the trade sale process and exploration of the viability of an IPO continue to proceed.
Summary thoughts on Link and the share price
The Link share price is steadily recovering from its declines over the last few years. But PEXA might be the best thing about Link, so if it is going to sell its stake it should try to get top dollar for it. But if I were a shareholder, I’d want Link to hold onto PEXA for the long-term.
But, there are other ASX growth shares that might offer more growth potential.
