The Link Administration Holdings Ltd (ASX: LNK) share price could be one to watch on Monday.
This follows the company’s update on its investment in property settlement business PEXA.
At Friday’s market wrap, Link shares closed the day at $5.45 after gaining 5% for the day.
What did Link announce?
In a statement to the ASX, Link advised it has signed an underwriting agreement to launch an initial public offering (IPO) for PEXA.
The enterprise value of the IPO is $3.3 billion, with Link’s carrying value at around $1.6 billion.
Link owns a 44.18% interest in Torrens Group Holdings Pty Ltd (TGH) which is the holding company for PEXA. However, prior to any scale back from this process, Link’s shareholding in PEXA will lift to around 47%.
As a result of the IPO, Link will receive a minimum amount of $50 million in cash, as well as any proceeds through the scale back.
PEXA is expected to list on the ASX sometime in late June, subject to a number of satisfying admission requirements.
The latest news comes after Link closed the door on the $3.1 billion takeover offer from Kohlberg Kravis Roberts (KKR) announced Friday.
In today’s announcement, Link Group CEO and managing director Vivek Bhatia said:
This is an outstanding outcome for the shareholders of Link Group. In October 2020, the Link Group Board considered that the private equity consortium’s bid for Link Group, including its interest in PEXA, significantly undervalued Link Group’s business including the PEXA asset. This has been now demonstrated through the book build undertaken on Friday valuing PEXA at $3.3 billion, representing an increase of approximately 70% on the consortium’s implied valuation of PEXA at $1.95 billion.
About the Link share price
Over the last 12 months, Link shares have gone on a rollercoaster ride, but have gained almost 35%. It’s worth noting that the company’s share price is now within reach of breaking its 52-week high of $5.68.
On valuation metrics, Link presides a market capitalisation of roughly $2.9 billion, with approximately 536 million shares on issue.