US-based private equity manager, The Carlyle Group, has lobbed a renewed stand-alone A$2.8 billion bid for ASX-listed investment administration firm, Link, in a hot market for back-office providers.
The non-binding Link offer, pursued via a Carlyle Asia Partners fund, comes just a week after global fund services group, Apex, completed a A$410 million buyout of another Australian investment administrator, Mainstream.
Carlyle was involved with Pacific Equity Partners in a consortium tilt at Link late last year that fell over in April 2021. At the same time, Link had embarked on a proposed trade sale of its 44 per cent holding in online property exchange, PEXA, before looking to spin-off the unit in an ASX listing. The latest Carlyle offer values Link’s PEXA holdings at A$2.38 per Link share (priced at A$5.38 in the proposal) compared to A$1.60 in its earlier joint bid.
Like Mainstream, Link has moved beyond home territory in recent years into Europe, the UK and Asia across multiple product lines. Link has long had an operation in NZ with a strong focus on shareholder services, though the group has some fund admin clients including the Aon KiwiSaver/master trust business (recently sold to Fisher Funds) and NZ Funds.
The Carlyle offer of A$5.38 per share represents a more than 24 per cent premium to the last quoted Link share price, according to a release on the ASX.
However, the proposal remains subject to several conditions including due diligence, financing, regulatory sign-offs and “final investment committee approval from the relevant Carlyle committees”, the statement says.
“The Link Group Board will consider the Proposal, including obtaining advice from its financial, legal and tax advisers,” the release says. “Link Group has appointed Macquarie Capital and UBS as its financial advisers and Herbert Smith Freehills as its legal adviser.”
In the wake of the Carlyle bid, Link paused an on-market share buy-back program about two-thirds through its announced target of A$150 million in stock repurchases.
Link is also fending off a class action in the UK fronted by legal firm Leigh Day in relation to the collapse of the Woodford Equity Income Fund in 2019.
In its action launched in September this year, Leigh Day says: “From our investigations, we believe that Link allowed WEIF to hold excessive illiquid or difficult-to-sell investments, which caused investors significant loss. In doing so, we consider Link breached the [Financial Conduct Authority] FCA Handbook rules and failed to properly carry out the management function of the Woodford Equity Income Fund.”
In the group’s 2021 ‘investor day’ last week, Link chief, Vivek Bhatia, said: “We hold leadership positions in our core markets globally and the opportunities for our business are significant.”