Getting to know the owners of PEXA

The three owners of PEXA will be Link Group, Commonwealth Bank of Australia and Morgan Stanley Infrastructure Inc. Everyone knows the Commonwealth Bank. Morgan Stanley Infrastructure is an investment fund but who is Link Group and why are they are so keen on electronic conveyancing?

The exact ownership percentages have not been settled but it looks like Link Group will become the largest single shareholder at around 44%. It already had 19.8%. At a sale value of $1.6 billion, the additional investment by Link Group to get to 44% would be around $390 million. 

The agreed value of $1.6 billion is $600 million more than the $1 billion that was often mentioned by PEXA’s CEO whenever asked for commentary on the eventual sale. A $1.6 billion value will result in windfall profits by the shareholders selling their shares. 

A byproduct of the substantial sale price is that Link itself will be able to show an unrealised windfall profit on its existing 19.8% share. 

Link Group is widely known for its shareholder register services to large corporations. It is a company that understands outsourcing, technology and systems. Electronic settlements is effectively built on these types of capabilities. 

Link Group Managing Director, John McMurtrie has hinted that PEXA will be broadening its service offering: “PEXA will emerge to be doing other things in that broad property ecosystem,” he told AFR.

Link Group announced that it will be paying for its investment with cash and existing debt facility.

In November 2017, the company made a $1.5 billion acquisition of a UK business called Capita Asset Services, now known as Link Administration Services. This was funded by a combination of issuing new shares and borrowings.

At 30 June 2018, Link Group had $839 million of borrowings. This will now increase with the PEXA acquisition. Its accounts show that Link Group is a highly profitable and arguably a highly leveraged company.

Some speculation about what else Link could do to get ‘bang for its buck’ with PEXA might be to launch the service in the UK market alongside its existing UK operations.