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UPDATE 2-Australia's Link eyes trade sale of coveted PEXA stake amid property boom

(Recasts and adds CEO comment on briefing call)

SYDNEY, Feb 1 (Reuters) - Australia’s Link Administration Holdings Ltd on Monday said it would prioritise a trade sale for its coveted stake in online conveyancing firm PEXA within months, instead of a demerger as it looks to capitalise on a property market rebound.

The strength of the housing market had influenced the decision to sell the stake outright instead of distributing PEXA shares to Link investors, the company said, even though it would mean paying capital gain taxes of about 30% on a deal.

Late last year, attracted by its 44.2% stake in PEXA - the dominant digital property transfer business in real-estate-obsessed Australia - at least two groups tabled unsuccessful bids for Sydney-based shareholder registry firm Link.

Australian home prices reached an all-time high in January amid record low interest rates, and “positive indicative interest” in PEXA had influenced the decision, Chief Executive Vivek Bhatia told analysts.

The process to demerge the company announced in October was now a less preferred option, Bhatia said.

“We do believe that for the sake of the process and building the competitive tension, we believe it is the best way to crystallize shareholder value at this stage.”

In December, PEXA processed a record number of monthly transactions benefiting greatly from a recovery in property prices and a shift to digital channels amid the pandemic.

Link had recently rejected the buyout offers from U.S.-based SS&C Technologies Holdings Inc, and a Carlyle Group Inc -led consortium on grounds that they undervalued core asset PEXA, announcing its intention to demerge its 44.2% interest to get the most out of its intrinsic value.

SS&C Technology had offered in December to buy Link for A$3.02 billion ($2.30 billion), nearly 5% higher than the rival bid from private equity firms Carlyle and Pacific Equity Partners. The consortium continues to have access to the data-room, Bhatia told analysts in the call.

In an exchange filing, the company also said it would abandon its planned 165 million euro ($200 million) acquisition of Pepper European Servicing Ltd from Pepper Group as the deal could not get regulatory approvals.

$1 = 1.3116 Australian dollars $1 = 0.8252 euros Reporting by Paulina Duran in Sydney; and Sameer Manekar and Anushka Trivedi in Bengaluru; Editing by Peter Cooney & Shri Navaratnam

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