Mortgage IPO goes low

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The Central Business District and the surrounding city are seen from the Sydney Tower Eye as NSW continues to report low numbers of new daily coronavirus (COVID-19) cases in Sydney, Australia. August 28, 2020 REUTERS / Loren Elliott

MELBOURNE, June 16 (Reuters Breakingviews) – PEXA needs further refinement to justify the rapid A $ 3 billion ($ 2.3 billion) estimate it is building. An Australian online mortgage settlement company opened its doors to the financial markets, prompting Carlisle to bid. (CG.O) and KKR (KKR.N)… Management and owners, including Morgan Stanley (MS.N) chose an initial public offering next month. This gives PEXA a dizzying 155x its net profit of AU $ 20 million in the year to June 2022. However, revenue growth could slow by two-thirds to 13% as its near-total dominance in its sector limits domestic expansion.

Key is moving overseas to England and Wales to enter the A $ 640 million electronic title transfer market, which enables automatic digital completion of property sales and purchases. That could add A $ 41 million to net income, assuming the company meets its 80% Australian market share and 8% net margin planned for next year. Accounting for this potential benefit, which can take years to generate, implies a 50x high return. Many major Australian IPOs are struggling read more the PEXA swagger stands out this year. [By Antony Currie]

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