ASX-listed Link Group will offload its corporate services arm to UK-based Apex Group for approximately $450 million after meeting all regulatory approvals.
Earlier this year, Link Administration Holdings Limited announced the sale of its Corporate & Private Clients business (CPCS), part of the Link Asset Services division, to global fund administrator Apex Group for a cash-free, debt-free consideration of £240 million.
Link Group this week advised that all regulatory approvals have been received and completion is expected to occur on 28 June 2019.
“After considering Link Group’s broader strategy, the decision was made to sell CPCS, and it is pleasing that all regulatory approvals have now been received to allow the sale to complete by the end of the financial year,” Link Group managing director John McMurtrie said.
The net cash proceeds of the sale will be used to reduce Link Group’s debt and strengthen its balance sheet. 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.
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.”
Link expects to post operating EBITDA of $350 to $360 million over the year to 30 June 2019 and operating NPATA to be approximately $195 to 205 million.
In FY18, the group delivered EBITDA of $335.3 million and NPATA of $206.7 million.