Link Group

Collins St Value Fund continues to hold Link Group (LNK) despite the challenges faced in recent years, including the failed takeover attempt by Dye & Durham (DND). Initially, the Fund believed the DND offer of $5.50 per share had a high likelihood of success, with the downside valuation around $4.50. However, the tech sector downturn and the UK regulator’s interference caused the share price to drop to as low as $2.77. Despite this, there remains strong interest in parts of Link’s business. The company plans to distribute its PEXA holding, valued at approximately $2.20 per share, and has already received offers for other assets worth over $1.3 billion. Collins St Value Fund believes that if these deals materialize, investors could see over $5 per share, representing a substantial premium to the current price. Given these factors, the Fund remains optimistic about Link’s prospects and continues to hold its position.

Collins St Value Fund continues to hold Link Group (LNK) due to its significant upside potential, despite the challenges faced in recent years. The Fund initially invested in Link anticipating a successful takeover by Dye & Durham (DnD), but the deal was ultimately scuttled by a UK regulator. In response, Link’s board decided to distribute its major asset, PEXA, to shareholders, while also putting the remainder of the company on the market. Link shareholders will receive PEXA shares, worth $1.67 per Link share, and the company is expected to earn a NPAT of $90 million, which the Fund values at $3.45 per share. Despite the frustrating history, Collins St Value Fund sees significant value in Link Group’s individual assets and remains optimistic about the company’s future prospects, particularly with the market’s current undervaluation. With these factors in play, the Fund believes the potential upside outweighs the risks, and it is excited to see what 2023 brings for the company.

Collins St Value Fund continues to hold Link Group (LNK) despite recent challenges, including a failed takeover attempt and a significant drop in share price. While the UK Registry and Administration business posed regulatory hurdles, the Fund believes the underlying assets of Link remain solid. The company has taken steps to address these issues, including the distribution of its PEXA stake and the proposed sale of its UK assets, which should alleviate the regulatory burden. Since these moves, Link's performance has improved, and Collins St Value Fund sees substantial potential in the company, especially if a sale of its assets is pursued. While there is no guarantee that the sale process will be revived, the Fund believes the sum of Link's parts makes it an attractive proposition moving forward.

Collins St Value Fund continues to hold its investment in Link Group, updating its investment thesis following recent corporate developments. The company has secured a new contract with its largest client, AustralianSuper, and now appears to be on track for a long-awaited takeover. After multiple failed bids from 2021 to 2023, Link has received a $2.26 per share offer (plus approximately 2 cents in franking credits) from Mitsubishi UFJ. With Board approval and fewer conditions than previous proposals, the acquisition is expected to be completed by June 2024. While the offer may seem lower than past intrinsic value estimates of $4.50, adjustments for dividends and prior PEXA distributions bring its equivalent value closer to $4.25. Collins St Value Fund acknowledges that while this represents a discount compared to earlier offers, it is not unreasonable given market shifts. Although the Fund believes Mitsubishi is acquiring Link at an attractive price, broader market sentiment suggests it may have taken years for Link’s share price to recover in the absence of a takeover. While remaining open to competing bids, Collins St Value Fund currently expects to vote in favor of the transaction later this year.