27/06/2018 - 15:31

$640m+ likely from partial Landgate privatisation

27/06/2018 - 15:31

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The state government will partially privatise title registry agency Landgate in a move expected to raise at least $640 million, with the money to be used to fund the state's share of the National Redress Scheme for child abuse victims.

Land title management is about 80 per cent of Landgate's revenue.

The state government will partially privatise title registry agency Landgate in a move expected to raise at least $640 million, with the money to be used to fund the state's share of the National Redress Scheme for child abuse victims.

It will be the second major privatisation by the McGowan Labor government, after Synergy’s renewable energy assets were rolled out in a deal with CBus Super and DIF, and comes as the state continues to consider a sale of betting agency TAB.

Treasurer Ben Wyatt and Lands Minister Rita Saffioti announced today that Landgate’s automated land titling service will be commercialised, but with restrictions on pricing changes for any new owner.

Landgate itself will remain under government ownership and continue to control property valuation, location information and land titling functions that have not been automated.

Mr Wyatt did not directly disclose the expected value of a deal but in a media statement said it would be likely to more than cover the $640 million required to fund the state’s requirements for the National Redress Scheme.

The NSW government leased its Land and Property Information registry for $2.6 billion in a deal announced last year, with an earnings multiple of about 20.

South Australia leased its land registry unit in a $1.6 billion deal in August.

The WA government appointed investment bank Investec as commercial adviser for a potential sale in February of this year, although the state government has resisted releasing the report.

To put it all in context, Langate revenue was $111.4 million in the 2017 financial year, and about $88.4 million came from land title management fees.

Exactly what portion of that is automated was not immediately clear.

About $21.4 million came from valuation services, while the agency overall made a $6 million loss before state government subsidies and grants were considered.

Mr Wyatt said the privatisation was an example of responsible financial management by the McGowan government.

“Due to the $40 billion worth of debt left by the Liberal National government, we need to ensure that there is a suitable funding source to pay for new expenditure decisions, such as signing up to the National Redress Scheme and lifting the statute of limitations for victims of child sexual abuse,” Mr Wyatt said in a release today.

Landgate has transformed itself into a world-class operator and the time is right for the government to realise a return on this investment.

“Today’s announcement will see value realised for the benefit of the state, whilst ensuring the protections and rights of the public are maintained.”

Under the proposed terms of the deal, price rises will be kept to within 1 per cent of the consumer price index, and no redundancies will be forced.

A second privatisation tranche is possible, with advisors to be appointed to consider the state government’s shareholding in information technology services business Advara, which was spun out of Landgate.

Landgate owns about 78 per cent of that business, with consultancy Ajilon controlling the remainder.

Former Landgate chief executive Mike Bradford is now chief executive of Advara.

Advara is the technology consultant for Australian Registry Investments, which recently took over as operator of the NSW land registry.

A third Landgate-connected asset could be privatised, with the agency holding 12.5 per cent ownership of Property Exchange Australia, an e-conveyancing business.

The government wants to move all property sales to online systems by the end of the year, with Pexa reportedly the only such provider.

It has been reported that business will eventually be floated on the stock exchange.

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