Link Administration Holdings Ltd (ASX: LNK) has lodged the prospectus for the initial public offering (IPO) of PEXA Group Limited. The prospectus is now available at the following link
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PEXA operates Australia’s leading digital property settlements platform with over 80% market share. The company is looking to explore opportunities abroad beginning with the United Kingdom – a market 2.5x Australia.
Shares in Link remain unchanged today at a share price of $4.93.
PEXA listing details revealed
The new company will trade under PEXA Group Limited with the ASX ticker code PXA. Subject to satisfying admission requirements, PEXA will begin trading on 1 July 2021.
PEXA will start trading at a price of $17.13 per share after raising $1.175 billion in the IPO.
Link will retain a 47% shareholding in PEXA and receive a minimum of $50 million of cash proceeds. Depending on the demand for shares in the IPO, Link’s holding may be scaled back below 47%.
PEXA has been valued at an enterprise value of $3.31 billion, therefore, valuing Link’s 47% shareholding at $1.55 billion.
For context, Link has a current market capitalisation of $2.64 billion. As a result, PEXA will account on a look-through basis for 60% of Link’s market cap.
Link Group’s CEO & Managing Director, Vivek Bhatia, said
“PEXA continues to lead the transformation of digital property settlement in Australia and now processes more than 80% of property transfers nationally through its platform. Its success in Australia supports strong cash flows as well as further growth opportunities through valuable data-driven insights for property market participants in Australia and the potential to replicate its property lodgement and settlement platform internationally, starting with the United Kingdom.
My take
The enterprise value of $3.3 billion values PEXA 70% above what private equity outfit KKR was willing to acquire PEXA for. Consequently, this validates management and the board’s decision to IPO PEXA rather than sell the business in its entirety.
The free float of shares remains relatively low, given Link will retain up to 47% shareholding and the Commonwealth Bank of Australia (ASX: CBA), has increased its shareholding up to 29%. PEXA is richly valued at 13.4x revenue (FY22) and 30.8x EBITDA (FY22). Nonetheless, investors have been queuing up to grab a slice of the largest IPO in 2021 to date.
I’ll be taking a closer look at the prospectus to gain a better understanding of PEXA and its growth opportunity.
For more share ideas, check out 3 ASX shares to add to your watchlist this week.
