November 5, 2018 / 11:05 PM / 12 days ago

UPDATE 2-Australia's PEXA agrees to sale at almost third below IPO value

* PEXA receives A$1.5 bln bid from shareholder consortium

* Offer values company at almost a third lower than shelved IPO

* CBA to spend A$50 mln on increased stake, Link seeks up to 44 pct (Recasts, adds background, financials)

By Paulina Duran

SYDNEY, Nov 6 (Reuters) - Property Exchange Australia (PEXA), an online real estate settlements firm, said a consortium led by two of its owners will buy the company for A$1.5 billion ($1.1 billion), a cut-price lifeline after it pulled a sharemarket listing a month earlier.

The price is a third below the A$2.2 billion top-of-the-range valuation the company put on itself when it marketed an Initial Public Offering this year. It cancelled the offer last month, citing market volatility.

PEXA said two of its owners - Australia’s top mortgage lender Commonwealth Bank of Australia and investor services company Link Administration Holdings - had joined up with a Morgan Stanley fund to buy the rest of the firm. As of Tuesday, they had acquired a combined 55 percent stake.

“The consortium ... have a combined track record of investing in, and strengthening, infrastructure and technology assets,” PEXA Chairman Alan Cameron said.

PEXA was formed in 2010 out of a government-mandated project to deliver a national e-conveyancing system for Australia’s A$6.9 trillion property market. Its shareholders include four state governments, the four largest banks and Macquarie Group .

It is currently the only firm allowing electronic lodgements and settlements of otherwise manual cheques and documentation, however its position may be threatened as two new firms prepare to enter the market, according to a draft prospectus distributed to potential institutional investors last month.

The document said the entrant of a new firm could “have an adverse impact on revenue and profit margins” and throw its forecast results into doubt.

PEXA posted A$31 million in losses in fiscal 2018, and expects to become profitable in the second half of 2019, it shows.

As part of the deal, Commonwealth Bank would spend A$50 million raising its shareholding to about 16 percent, while Link expects to take a stake of up to 44 percent, the companies said.

Depending on the level of final acceptances, the valuation would increase to up to A$1.6 billion, Link said its statement.

A spokesman for Macquarie, owner of 23 percent of the company, declined to comment.

$1 = 1.3856 Australian dollars Reporting by Rushil Dutta in Bengaluru and Paulina Duran in Sydney; Editing by Byron Kaye and Stephen Coates

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