Finance group closes on Pexa
A GROUP of big finance companies including the Commonwealth Bank has seized control of a major technology business that plays a leading role in property settlements.
CBA, Link Administration Holdings and a division of US investment bank Morgan Stanley have secured a majority stake in Property Exchange Australia, or Pexa.
It comes after the consortium tabled a revised bid for Pexa last week, still valuing the company at about $1.6 billion but, according to market speculation, carrying fewer conditions.
The bank and Link already had major stakes in Pexa and are increasing their holdings significantly. An industry source said CBA’s move could be a precursor to more such deals under chief executive Matt Comyn, who took the reins of the group in April.
The bank, Australia’s biggest, is poised for a windfall as it offloads about $8 billion worth of businesses in sectors such as wealth management and mortgage broking amid the fallout from the financial services royal commission.
An electronic property settlement exchange, Pexa was founded eight years ago in response to the Council of Australian Governments’ push for a single, national e-conveyancing service for the property industry.
It allows members such as lawyers, conveyancers and financial institutions to lodge documents with land registries and complete property settlements electronically.
Other key shareholders in the unlisted company include the Victorian, NSW and West Australian governments, the other three major banks, investment bank Macquarie and businessman Paul Little.
It was unclear last night which investors had agreed to accept the consortium’s offer, enabling the CBA and Link, with Morgan Stanley Infrastructure Partners, to lift their combined holding above 50 per cent.
The deal comes after Pexa, amid choppy sharemarkets and a lack of support among would-be institutional investors, abandoned plans for an initial public offering.
The CBA will invest a further $50 million in the exchange, taking its total investment to $100 million and increasing its stake from 13.1 per cent to about 16 per cent. Link will lift its stake from 19.8 per cent to between 27 per cent and 44 per cent.
Mr Comyn said the transaction was in line with the CBA’s strategy of focusing on its “core banking businesses and to create a simpler, better bank for our customers”.