KKR, Domain team up for Pexa bid
Private equity giant KKR&Co has netted a big fish in its quest for Australian property settlement platform Pexa.
Street Talk can reveal KKR is working with property listings and services giant Domain Holdings Australia on a joint bid for Pexa’s holding company Torrens Group Holdings, which is in play courtesy of a strategic review at Link Group.
The KKR/Domain pairing seeks to match KKR’s deep pockets and dealmaking expertise - $US252 billion in assets under management and more than $US50 billion dry powder - with Domain’s knowledge of the Australian property market and desire to dominate “all of life’s property decisions”.
It’s a potential coup for both parties - as long as they can stick tight as the auction heats up in coming months and agree on points such as value. Teaming up with Domain boosts KKR’s credentials over rival private equity bidders, and helps Domain work out how to fund its interest and reduces its reliance on equity capital market conditions.
It is understood the pair are working together in the early stages of Pexa’s auction, which is handled by Macquarie Capital and UBS. Up for grabs is an initial 44.2 per cent stake owned by Link Group, although there are expectations one of Pexa’s two other shareholders may add some of its holding to the selldown.
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Domain CEO Jason Pellegrino. Peter Braig
Macquarie and UBS kicked off the auction at the start of the month,when they sent a eight point pitch to potential buyers. It is understood bidders have signed confidentiality agreements but are yet to receive formal process letters or information memorandums, outlining Pexa in full detail.
The KKR/Domain consortium shapes as one of the keenest contenders. It’s expected to come up against Macquarie’s infrastructure arm MIRA, which operates property registries in South Australia and Western Australia, and would be expected to require ACCC approval to invest in Pexa.
Another angle for KKR/Domain may be the private equity partner’s blossoming relationship with Commonwealth Bank of Australia. KKR has a deal to acquire a 55 per cent stake in CBA’s superannuation business Colonial First State, and has spent the past 12 months working with Australia’s biggest bank to structure and finalise the transaction.
During that time, KKR’s operatives would have had the chance to develop a strong relationship with CBA’s hierarchy. CBA owns an 11.4 per cent stake in Pexa’s holding company, Torrens. CBA has not expressed its intentions leading into the Link stake auction.
Domain is 60 per cent owned by Nine Entertainment, publisher of The Australian Financial Review. KKR and Domain declined to comment.
Pexa’s expected to be worth more than $2.5 billion, valuing Link’s stake north of $1.1 billion. The purpose built property transactions platform, which electronically matches funds between a property’s buyer and seller at the time of settlement, made $181 million revenue and $82 million EBITDA in the year to December 31.
