Conventional property settlement is daunting for some of us. Having to go back and forth to lawyers, conveyancers, and financial institution offices during lunch breaks is rather time consuming and stressful. As the world progresses to the digital era, PEXA (ASX: PXA) has been facilitating 80% of modern property exchanges in Australia by creating a platform where all related parties are able to collaborate online.
Following their success, PEXA is ready to expand their service area to the UK by acquiring UK-based refinancing firm Optima Legal which owns approximately a 22% share of the remortgage market and direct relationships with six of the UK’s top eight lenders. As interest rate spikes up, Australia has hit record highs for refinancing activities to get the best rate possible. This trend seems to be happening in the UK too as the Bank of England could be raising its key interest rate by 250 basis points to 4.25% by March. A year ago, the benchmark was just 0.1%.
PEXA’s offering is a streamlined and automated solution that is integrated into Her Majesty’s Land Registry and the Bank of England, enabling smooth remortgages and faster settlements. Consumers benefit from increased speed and certainty, greater transparency of the post-offer process, and better loan deals created by ease of switching. Lenders stand to benefit from reduced processing costs, decreased time to settlement and increased remortgage capacity. Additionally, PEXA provides conveyancers with a streamlined platform which delivers a higher quality of service for customers.
PEXA Group Managing Director and CEO, Glenn King said: “The acquisition of Optima Legal presents a fantastic opportunity to facilitate the roll-out of digital property settlements in the UK.
In Australia the market understands and has already largely embraced the benefits of a digital property settlement solution, so we look forward to demonstrating that value to a new audience.”
“A digital settlement solution will deliver improved accuracy and efficiency while reducing costs”
Today’s announcement follows the successful launch of PEXA Pay, the seventh net settlement payment scheme in the UK, with the Bank of England acting as the settlement agent. PEXA also partnered up with ClearBank to allow the final disbursement of funds to transaction accounts held with lenders that are not on PEXA, opening the functionality to the wider market.
The acquisition of Optima Legal, of which the exact purchase price was not disclosed, will be funded from PEXA’s existing cash reserves of $75.4m as of 30 Jun 2022, and is subject to approval, including from the Solicitors Regulatory Authority of England and Wales, and is expected to complete before the end of the calendar year. Given the strategic nature of the acquisition, PEXA is expecting to generate an immaterial operating loss in FY23.
PEXA delivered a positive performance in FY22 by reporting $21.9m net profit after tax, up $33.7 million from the $11.8m loss that it incurred during the previous financial year. PEXA’s market share increased by 7% of the total addressable market, resulting in 4.05 million PEXA Exchange transactions completed in FY22, an uplift of 0.72 million on the 3.33 million transactions in FY21. This equates to a revenue increase of $22.5 million.
Clara is a Business Reporter for The Sentiment.
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