Bawa: Significant progress
PEXA, the Australian conveyancing technology giant that last year bought a UK law firm, could expand its operation here yet further by acquiring listed company Smoove, which also owns one.
Smoove told the stock exchange that PEXA had begun “early discussions” over a possible cash offer for the company once known as ULS Technology.
As a result, Smoove has ended talks about an alternative transaction with another third party which would not have led to a takeover.
Smoove runs eConveyancer – a conveyancing comparison tool for the financial services sector with a panel of 70 law firms – and digital conveyancing platform DigitalMove.
It also owns conveyancing firm Amity Law, which it bought in 2021, and compliance consultancy Legal Eye.
Under the City Code on Takeovers and Mergers, PEXA has until 22 May to announce whether or not it intends to make an offer for Smoove.
In its 2022 financial year, Smoove generated 66,394 instructions for panel law firms. Revenue grew 13% to £19m, but losses increased to £4.9m, which it attributed to investment in its products.
In a statement, PEXA said: “PEXA Group continues to review appropriate opportunities for inorganic growth both domestically and overseas. The early-stage discussions with Smoove are consistent with this strategy.
“Since discussions are at a very early-stage, there is no certainty that any offer will be made nor as to the terms of any such offer. If an offer is made, however, it would be likely to be made solely in cash.”
PEXA – which stands for Property Exchange Australia – is an entirely online property exchange network which completed its first transaction in the state of Victoria in 2013 and since then has handled more than 11m transactions across Australia. It processes 80% of conveyancing completions in the country.
It was listed on the Australian Stock Exchange in 2021 and currently has a market capitalisation of A$2.4bn (£1.3bn).
Last year, it acquired specialist property law firm Optima Legal from Capita, having entered the UK market earlier in 2022 to support the digitisation of property transactions.
The deal was announced the day after the launch of PEXA’s remortgage platform in England and Wales. Its platform for sales and purchases is set to go live next year.
Last month, PEXA announced that it was working with an initial cohort of “origination platform providers”, including Iress, nCino, Sopra Banking Software and Ohpen, “to identify opportunities to enhance the integration of its platform with lenders and brokers and reduce friction points for all involved in the conveyancing experience”.
Three law firms also joined the network as customers: PLS Solicitors, The Partnership and Dutton Gregory Solicitors.
“Plans are already underway to onboard further lenders and law firms in the UK throughout 2023,” PEXA said.
“In 2024, PEXA aims to broaden its proposition to bring the same benefits it has brought to the remortgage process to the sale and purchase process.”
PEXA’s first transaction in England and Wales took place last September, with Hinckley & Rugby Building Society and conveyancing firm Muve, which it said was “the UK’s first ever digitally enabled remortgage transaction”.
It allowed the parties to arrange the financial settlement directly from the incoming lender’s account and collaborate to lodge the application for registration with HM Land Registry, reducing a process that typically takes days into minutes.
PEXA has also collaborated with the Bank of England to develop PEXA Pay – only the seventh net settlement payment scheme to clear through the bank, and the only one dedicated to property transactions.
Speaking last month, PEXA UK chief executive, James Bawa, said: “We have made significant progress to date in transforming the property market for consumers, lenders and law firms.
“The raft of collaborators we continue to engage with at pace is testament to the shared vision the industry holds in needing to change.”
Separately, NAHL, the listed legal marketing and services business, has announced the sale of its residential conveyancing business Homeward Legal, which generate leads and instructions for panel law firms and surveyors.
Richard Rickwood, a former managing director of NAHL’s residential property business, is acquiring Homeward for £150,000 in three instalments, plus further consideration depending on performance over the next two years.
Homeward has six staff and last year generated revenue of £1.2m and a £13,000 operating profit.
NAHL has been looking to dispose of Homeward for nearly two years after deciding it was not core to the business.
Chief executive James Saralis said: “The sale of Homeward Legal is a good outcome for all stakeholders. It is in keeping with our strategy to build a sustainable and profitable business in the medium term and will allow us to continue to develop the two core elements of our business, consumer legal services and critical care.
“We are confident that under its new ownership, Homeward Legal will uphold its customer and colleague first approach and wish the new owner and staff every success for the future.”
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