Link fields ‘positive interest’ in majority PEXA stake

Admin services provider Link chief executive Vivek Bhatia says investors are showing interest in buying its majority PEXA stake as the company ditches plans to acquire a European credit provider.

Link announced last month it was exploring options to sell its 44 per cent stake in the property settlements platform, which has processed more than 5.4 million transactions since launching in 2014.

Mr Bhati said PEXA has strong business momentum and a “very capable team” leading it, adding the housing market was experiencing positive movement despite the challenging economic outlook.

“It’s still early days, however, we are seeing positive indicative interest,” Mr Bhatia said.

Vivek Bhatia, the new CEO of Link, said the due diligence process was still continuing.
Vivek Bhatia, the new CEO of Link, said the due diligence process was still continuing.Credit:Louie Douvis

Mr Bhatia said Link had given the PEP-led consortium a time-frame to complete due diligence and “will see it through” but added, “broadly the management team is focused on running the business” rather than any negotiations.

The update came as Link announced it was terminating plans to buy-out Pepper European Services (PES) after terms and conditions of the binding contract were not met one year after the deal was signed.

Link signed an agreement with PES in January last year to acquire the business, as part of its strategy to expand into banking and credit management services and take advantage of emerging markets through PES’s customer base in Cyrpus and Spain.

However, Mr Bhatia’s new strategy involves simplifying Link’s operations and he said COVID-19 had also contributed to the decision to sever the deal.

“Since January of last year, the world has dramatically changed. There is no doubt about that. The regulatory approval process has been elongated and challenging, partly due to COVID,” he said. “Execution of a transaction of this scale and scope is relatively a lot more difficult in these times.”

Mr Bhatia said Link’s management team could now avoid any distraction, the company could retain a strong balance sheet and pursue opportunities “as and when they arrive”.

Morningstar analyst Gareth James said there was little substance to the PEXA update. “They said the process is going well, which I think anybody will say that when they’re running a sale process of any asset just to generate competitive tension,” he said. “For me, the real news was the PES transaction.”

However, Mr James added selling PEXA would be difficult, despite its strong performance.

“It’s not like you’re trying to sell a business, you’re trying to sell a stake in a business. You’re trying to find someone who wants to go into an unlisted business. It’s a highly regulated, highly politicised investment,” he said.

Link’s share price jumped by 2.3 per cent to $4.89 by afternoon trade.

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