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As a digital exchange platform that already has an 88 per cent market reach in Australia, PEXA Group (ASX: PXA) has now been active in the UK as well for just over a year and is marking the occasion with a £30.8 million ($58.6 million) acquisition of Oxfordshire-based conveyancing technology provider Smoove.
Melbourne-headquartered PEXA has reached a deal for the proposed acquisition via a scheme of arrangement at 54 pence per share in Smoove, which is listed on the alternative investment market of the London Stock Exchange.
Smoove's board of directors intends to unanimously recommend that shareholders vote in favour of the takeover, and if successful the acquisition should be completed by the end of 2023.
The acquisition will be funded through cash currently held by PEXA, which has been drawn down from its existing facility and a newly established facility that has a limit of up to $40 million.
PEXA made its first UK acquisition in September last year with the purchase of Optima Legal, one of Britain’s largest mortgage processing firms, giving it access to a large chunk of the remortgage market and exposure to six of the region’s top eight lenders.
There appears to be a similar rationale in the acquisition of Smoove, which will give the Australian-bred technology company access to more than 75 conveyancer firms through Smoove's e-Conveyancer marketplace service, in addition to approximately 2,100 firms through the work that Smoove does in arranging panels for lenders across the UK market.
Smoove also currently accounts for around 7 per cent of remortgage flows in the UK market, as well as 3 per cent of sale and purchase flows.
PEXA, which has a market capitalisation of $1.95 billion, also highlights the acquisition would create opportunities to cross-sell the PEXA platform to panel firms of Smoove, and help build relationships with key Smoove customers such as Lloyds Banking Group.
"The acquisition is aligned with PEXA Group’s strategy of enhancing and leveraging our property exchange know-how to deliver growth from different markets, including in other Torrens title jurisdictions, starting with the UK," says PEXA Group CEO and managing director Glenn King.
"Since entering the UK market, the PEXA Group has launched its first remortgage product, successfully brought two lenders onto the PEXA platform and acquired and progressed integration of specialist remortgage conveyancer, Optima Legal.
"The acquisition and integration of Smoove into the PEXA UK business will further help us address the many detriments suffered by consumers due to the UK’s fragmented, inefficient conveyancing processes.
"The acquisition will allow us to build additional scale and depth in the UK market, enabling the PEXA product suite to reach more customers, whilst streamlining and improving the UK property transaction experience."
In line with regulations in the UK, the proposed scheme must be approved by shareholders representing no less than 75 per cent of the company's value. PEXA has already received commitments from shareholders accounting for 56.14 per cent of shares as at the close of business on 3 October, 2023.
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