Link Market Services Closes Purchase Of CIBC Mellon Trust Co Canada Business

Link Market Services closed its purchase of CIBC Mellon Trust Company's stock transfer business in Canada on Wednesday, yet another step in private equity parent Pacific Equity Partners' plan to build Link into a stiff competitor to global share registry giant Computershare Ltd. (CPU.AU).

Canadian-Australian cross-border M&A activity has picked up this year, so much so that Credit Suisse called it "potentially the start of a more meaningful trend" in early October. Canada is a major market for Link's rival Computershare; it was the fourth largest region in terms of revenue contribution for Computershare and the third biggest contributor to earnings before interest, tax, depreciation and amortization in fiscal 2010.

Australia is home to the two of the largest global share registry firms, with Link taking up the number two position in terms of market share in Australia, the U.S. and now Canada. Despite having bought the seed company for Link five years ago, PEP is not preparing the company for an initial public offering at the moment, Cameron Blanks, PEP's managing director said.

Link is believed to have an enterprise value of around A$2 billion. Computershare has a market capitalization of A$5.8 billion.

When the group is ready to IPO, Blanks said PEP will pursue an Australian listing for Link given the group has a local competitor in Computershare.

From running a share registry firm, Blanks said deal momentum appears to be building for 2011. He said there are 10-15 companies preparing for IPOs with registries with Link in Australia and that Link has around 40% of the domestic market share, which could mean more than 35 companies are ready to attempt a listing in the broader market.

The IPO market has been all but shut to large deals this year after the disappointments of the Myer Holdings Ltd. (MYR.AU) and Kathmandu Holdings Ltd. (KMD.AU) floats late last year. The multi-billion QR National public offering, pricing in November, could change the tone of the IPO market -- or at least that's what bankers are hoping.

As for M&A activity, Blanks said the signs are pointing to that picking up in Australia as well in 2011. The current year has been a relatively quiet one for M&A activity with caution reigning in corporate board rooms but investment bankers say that will change when confidence picks up, given companies have cash to spend.

PEP will continue to grow Link's business in India and Hong Kong and Blanks said there are growth opportunities in North America as well. PEP has done more than A$1 billion of acquisitions this year. The private equity industry is a rare bright spot in Australia, with major deals still being done despite some of the caution in the corporate sector.

-By Cynthia Koons; Dow Jones Newswires; [phone]; [e-mail]