PEXA float gets crunched by tech carnage
The sharemarket carnage has imperilled the proposed $2.2 billion float of online property conveyancer PEXA.
The company's board is considering whether to pull the plug on its plans to raise as much as $750 million and list on the ASX next month after sources confirmed that institutional investors failed to complete the book build on Thursday morning.
The book build is designed to lock in these investors for the initial public offering (IPO) and set a price for retail investors next week in what promised to be one of the biggest raisings ever conducted by an Australian tech stock.
PEXA investors, which include the Victorian and NSW governments, might still get their big pay day.
The PEXA board is now reconsidering the option of a private sale of the business to a consortium led by some of its largest investors like Link Administration Holdings and Commonwealth Bank, according to sources close to the IPO.
PEXA is still making a loss, but investors expect it to profit as the $300 billion paper-driven property conveyancing industry moves online. PEXA is currently the only operational online property lodgement and settlement network. Both NSW and Victoria have mandated that all settlements will be online by July next year.
Doubts about the float were raised on Thursday morning after the tech-heavy Nasdaq Index in the US experienced its worst day of trading in seven years. Market darling Atlassian was down 7.3 per cent overnight.
According to Reuters, global tech stocks have lost about $US1 trillion, or 9 per cent, of market value this month over concerns about sky-high valuations, worries that global growth might be peaking, and trade tensions between the US and China.
The PEXA board, which is chaired by Alan Cameron and includes rich lister Paul Little, decided to brave the sharemarket turmoil last week and declined a $1.6 billion offer from the Link consortium in favour of an IPO.
Their bravery was not rewarded after the Nasdaq closed down 4.43 per cent on Wednesday.
"You could not find a worse backdrop than the one we just found ourselves with," said a source close to the transaction.
The sell-off carried on through Australian and Asian markets on Thursday despite an aftermarket recovery in the US thanks to surprisingly strong financial results being released by Microsoft and Tesla.
Xero shares were down more than 5 per cent when the market opened on Thursday, another tech darling, Appen, was down 4.9 per cent and AfterPay was down 4 per cent.
Logistics group WiseTech briefly defied the tide with a profit upgrade on Thursday morning, but its shares were also trading in negative territory by midday.
The market downdraft has also dragged down another tech hopeful: US-based reviewing site Pinchme, which has prominent backers like Melbourne’s Liberman family, media scion Ryan Stokes and PEXA investor Paul Little.
Pinchme dived 22 per cent after making its market debut on Wednesday, and was down a further 12 per cent to 34¢ on Thursday. The company raised $8 million at 50¢ a share this month.
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