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Link fields ‘positive interest’ in majority PEXA stake

Mr Bhatia said Link had given the PEP-led consortium a time-frame to complete due diligence and “will see it through” but added, “broadly the management team is focused on running the business” rather than any negotiations.

The update came as Link announced it was terminating plans to buy-out Pepper European Servicing (PES) after terms and conditions of the binding contract were not met one year after the deal was signed.

Link signed an agreement with PES in January last year to acquire the business, as part of its strategy to expand into banking and credit management services and take advantage of emerging markets through PES’s customer base in Cyprus and Spain.

However, Mr Bhatia’s new strategy involves simplifying Link’s operations and he said COVID-19 had also contributed to the decision to sever the deal.

“Since January of last year, the world has dramatically changed. There is no doubt about that. The regulatory approval process has been elongated and challenging, partly due to COVID,” he said. “Execution of a transaction of this scale and scope is relatively a lot more difficult in these times.”

Mr Bhatia said Link’s management team could now avoid any distraction, the company could retain a strong balance sheet and pursue opportunities “as and when they arrive”.

Morningstar analyst Gareth James said there was little substance to the PEXA update. “They said the process is going well, which I think anybody will say that when they’re running a sale process of any asset just to generate competitive tension,” he said. “For me, the real news was the PES transaction.”

However, Mr James added selling PEXA would be difficult, despite its strong performance.

“It’s not like you’re trying to sell a business, you’re trying to sell a stake in a business. You’re trying to find someone who wants to go into an unlisted business. It’s a highly regulated, highly politicised investment,” he said.

Link shares ended the session 1.7 per cent higher at $4.86.

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