Link Group, which owns a 43 per cent stake in the Australian fintech firm, saw a takeover bid by Dye & Durham collapse last week, after the Financial Conduct Authority warned that one of Link’s subsidiaries may be liable for a £50mn fine over its management of the Woodford Equity Income Fund.
Speaking to FTAdviser, Pexa Group chief executive, Glenn King said while he cannot comment on the Link and Dye & Durham deal, he would say that Link has been “a very good shareholder of the Pexa Group".
Before the Link and Dye & Durham deal collapsed, the FCA issued a draft warning notice fining Link Fund Solutions, a subsidiary of Link, £50mn following an investigation into its handling of the Woodford fund. This was in addition to the £306mn in redress it previously said Link would be liable for.
The FCA had warned Dye & Durham that its approval of the takeover was conditional on D&D’s ability to make up any shortfall in Link Group’s ability to pay any redress imposed.
“It looks like that deal is not going to go forward. What does that mean for the Pexa group? Well, I think that will play out in terms of how Link actually wants to move forward on these shareholdings in the Pexa Group. I don't see either, or multi scenarios being negative for Pexa Group,” King said.
“Pexa is a growth stock that has a lot of investors who want to invest in it. So I think if anything, it just allows other investors to get into Pexa stock if Link decides to progress in a different way,” he added.
At the moment, Pexa is in the midst of launching its offering in the UK, first beginning with England and Wales with the ambition of helping to centralise the property remortgage and completion process.
The platform said it will enable a "streamlined and digitised remortgaging process for UK consumers"- reducing associated time, risk and costs, while also providing an improved customer experience.
“It is a very unique digital tech company. There's nothing else like it in the world,” King told FTAdviser.
It enters the UK market having facilitated over 11mn property transactions in Australia worth circa AUD $2trn (£1.16trn).
Last month, it was announced that Hinckley & Rugby Building Society and Shawbrook Bank would be the first two lenders to begin transacting remortgages digitally via the platform.
The announcement followed successful testing of the firm’s Pexa Pay system earlier this year and more recently, the firm announced that it is in the process of acquiring Optima Legal, the specialist property law firm based in Leeds.
“We decided to acquire Optima Legal for a couple of reasons,” King said.
“It will help the large banks who are already using Optima Legal for their remortgage processing. Our intent is to further streamline that process by putting the Pexa platform into the Optima Legal tech system and make it a more efficient process.”
King also noted that the acquisition will help the firm accelerate its scale in the UK.
While it has started with digitising the remortgage process, the firm has a two-dimensional plan for growth based on getting more financial institutions on board and by increasing the volume of services offered.
By 2024 it plans to have scaled the volume of institutions on the platform for remortgaging purposes and to also begin testing silent purchase transactions on the site with a view to going live in 2025.
King pointed out that while mortgage brokers will not use the Pexa platform directly, they will nonetheless gain from a more streamlined service, as well the end customer.
“With the cost of living and interest rates going up there’s going to be more people looking for better interest rate deals. For the broker, having Pexa helping on the remortgage ensures that they don't get pushed behind in the last transaction.
“Because it is seamless it should be done a lot faster, and that's good for the mortgage broker as it reduces the number of calls they get and it gives greater certainty in terms of the fees and commissions. But it also means better outcomes for their own clients,” King said.
UK specific
While the company has used the blueprint from its success in Australia, its tech has been designed specifically for the UK market.
“We didn't take our tech platform in Australia and say, ‘we're just gonna lift and drop’, what we decided to do was build a new tech platform based on the learnings in Australia, and do it in a more agile way. What that allows us to do is to ensure it's nuanced for these markets.”
In addition to Hinckley & Rugby Building Society and Shawbrook Bank, seven other financial institutions have signed up to go live with Pexa UK, with their announcements to be staggered over 2023.
jane.matthews@ft.com
