ASX-listed financial services company Link Administration Holdings (ASX:LNK) has entered into a share purchase agreement with LC Financial Holdings (LCFH) for the sale of its Banking and Credit Management (BCM) business for a cash consideration of up to $48 million (EUR$30 million).
Link Group will receive EUR$20 million cash consideration at completion plus a deferred cash consideration of EUR$5 million payable within 12 months of completion, and a cash earn out of EUR$5 million subject to BCM meeting certain financial targets by the second anniversary of completion.
The company expects this transaction will be complete in the second half of 2023, subject to approval from the Financial Conduct Authority, Central Bank of Ireland, and the Dutch Authority for the Financial Markets.
“As part of our simplification strategy, we have today entered into a binding agreement to sell the BCM business”
Commenting on the agreement, Link Group Chief Executive Officer (CEO) and Managing Director Vivek Bhatia said: “As part of our simplification strategy, we have today entered into a binding agreement to sell the BCM business. I would like to thank Antoinette Dunne and her team for all their work in finalising this transaction over the past few weeks.
Antoinette and her leadership team will now commence working with LCFH on a seamless integration planning process. In the meantime, we continue to remain focused on our clients and delivering service excellence to them.”
LC Financial Services CEO Paul Burrell says the company identified the BCM business and team as being both highly regarded in its sector, and complementary to LCFH’s existing group of companies.
“We have the desire, skill, and determination to help the BCM leadership team to create a best in class, global mortgage and loan servicer. BCM has an excellent roster of banking and investor clients in Ireland, UK, Italy, and the Netherlands, and we are confident that they will continue to provide an outstanding service.”
Link Group reports its liquidity position remains strong, and the sale proceeds will be used to pay down debt. After the BCM sale is complete, the company’s pro-forma leverage ratio will remain in the guidance range of 2x to 3x which is consistent with Link Group’s target capital structure.
The company is also reaffirming its FY23 guidance provided at its 1h FY23 results on 24 February 2023 with expectations of operating earnings before interest and tax (EBIT) to be up 10% to 12% on FY22.
Link Administration Holdings is an ASX-listed financial services company that connects millions of people with their assets, including equities, pension, and superannuation investments, property, and other financial assets.
The company partners with thousands of financial market participants to deliver services, solutions, and technology platforms that enhance the user experience and make scaled administration simpler.
LC Financial Holdings comprises LCM Partners, a European alternative credit investment manager, and the Link Financial Group loan servicing companies which operates in 9 European countries with over 1,000 employees. The company was established in 1998 and specialises in investing in consumer and SME loans, and asset finance together with related loan management activities.