Link Administration Holdings Limited has entered into a binding agreement to sell part of its UK division to a global fund administrator for approximately $450 million.
The ASX-listed Link Group will offload its Corporate and Private Clients (CPCS) business, which is part of Link Asset Services (LAS) to Apex Group for a cash-free, debt consideration of £240 million ($450 million).
“Link Group recognises that CPCS is a successful and robust business and a valuable part of the Group. However, after considering our broader strategy, we concluded that the business would better achieve its potential under different ownership and allow Link Group to focus on those businesses where we can more readily apply our technology and innovative solutions to support our clients and future growth,” Link Group managing director John McMurtrie said.
“Like CPCS, Apex focuses on high client service levels. Apex has emphasised the strategic fit of the CPCS business with the other businesses owned by them and the benefits this will provide to CPCS staff and clients. We wish the business well in the future.”
In the 12 months to December 2018, CPCS has contributed approximately £78 million ($140 million) to Link Group revenue and approximately £20 million ($36 million) to Link Group Operating EBITDA.
Based on current exchange rates, Link Group expects to recognise a post-tax accounting gain on completion of the sale. On completion of the sale, the net cash proceeds will be used to reduce Link Group’s debt.
“The proceeds of the CPCS transaction will provide Link Group with a stronger and more flexible balance sheet enabling us to continue to assess growth opportunities that are strategically aligned to our core business priorities,” said Mr McMurtrie.
“Link Group’s revolving debt facility means any headroom created by debt reduction remains available to support future acquisitions in accordance with Link Group’s growth strategy.”
Including the proceeds and excluding the EBITDA generated by CPCS, the pro forma net debt to Operating EBITDA ratio is expected to fall into the bottom half of Link Group’s guidance range of 1.5x to 2.5x, after taking account of the recent PEXA transaction which completed and was announced on 16 January 2019.
The transaction is subject to mandatory regulatory approvals and is expected to complete by 30 September 2019.
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