Prior to Russel Cohen assuming the role of PEXA (ASX: PEX) CEO and MD on the 28/2/25 he stated in an ASX release: “PEXA has significant opportunities ahead to leverage its core strength as a platform and digital solutions business. My ambition is to create sustainable value for shareholders, customers, employees and other stakeholders through disciplined strategic execution and clear focus on returns.”
The article below explains what this statement by Mr Cohen means in practice. (Below article thanks to Ivor Ries and the Rampart website. Dishonourably reproduced by Scoonie without permission).
PEXA simpli Unstoppable
By Ivor Ries
There are Monopolies and then there is PEXA.
Australia's residential property market is one of the most largest and most liquid and most efficient the developed world with more than 600,000 dwellings worth hundreds of billions changing hands each year and a transaction failure rate too small to calculate. The foundation stones of Torrens Title registration system and a national electronic title transfer delivers transaction speeds and certainty that are the best.
The only problem with this picture is the original vision for a competitive market place in title transfers – with multiple competing property exchanges – has run into a brick wall. That brick wall is a company called PEXA Group Ltd, which now accounts for 90% of all property transactions in Australia and 100% all of electronic transfers.
PEXA is a monopoly and over the past few years it has done an excellent job of using lobbying cajoling and lawfare to prevent any other player from cracking into the electronic transfer market. By any other player I mean Simpli the only potential challenger which is owned by Christian Beck’s legal software ATI group (50.1%) and the ASX (49.9%). Since it started in 2018 Simpli is has racked up losses of more than $120 million and is yet to execute more than a few small trial transactions. The property conveyance industry desperately wants a viable competitor to PEXA as they fear that overtime the monopolistic PEXA will nickel and dime away their already slender profit margins, one fee increase at a time.
Not that you will find many property conveyances who will stick their heads up and publicly take on PEXA. PEXA is fond of sending threatening legal letters to anyone who might criticise it stand in its way or look at it sideways like Al Capone PEXA has many enemies but none will testify against it for competition to work electronic title transfers rival exchanges called electronic lodgement network operators or ELNOs, must be able to talk to each other seamlessly which in industry speak is called interoperability. Interoperability is essential if a property buyer is using one ELNO is to make a binding deal with a seller using arrival ELNO. If the wires get crossed between the two different ELNO's a transaction would be stuffed up and a manual work around would be required
In 2020 after several years of delays State and Federal ministers who oversee property transactions got together and stated that PEXA and Simpli had agreed to work together to have an agreed interoperability standard by March 2021. Four years later we are no closer to an interoperability standard.
Blocking and Delaying Tactics
The new regulatory deadline for interoperability is December 2025 . Like all earlier deadlines this one will pass with PEXA executives rolling around on the floor laughing. Delays and road blocks work very much in PEXA’s favour. PEXA knows that eventually Simpli shareholders will abandon their quest for a piece of the transfer market and PEXA will be king of the conveyancing world into the end of time. And for the production of delays and road-blocks PEXA takes the gold medal with a rich history of blocking and delaying tactics. Some of the recent ones take the cake. Last year PEXA sent legal notices to the major banks advising them not to participate in industry workshops where lawyers conveyances and the banks met to discuss progressing for interoperability as would this would breach PEXA’s intellectual property.
In December 2023 PEXA’s lawyers, Arnold Bloch Liebler sent a warning shot to ARNEC the Federal-State body charged with making interoperability work. After listing a number of reasons why PEXA did not feel bound by the joint Federal and State laws that regulate the industry, the letter argued that interoperability would allow Simpli to copy PEXA’s intellectual property. ABL partner Justin Vaastra wrote that: “PEXA is duty bound to protect its intellectual property and other property rights in the PEXA platform and the interests of its shareholders and stakeholders. If the interoperability model pursued by ARNEC and the IOP (interoperability programme) scope threatens to jeopardise those interests, PEXA will need to take steps to protect its rights”. In other words if you the Government Regulator want to impose the interoperability required under the Federal and State laws we will sue you. The lawfare strategy as intended scared the bejesus out of the banks and everyone else. Workshop sessions were delayed - and the big banks who's buy-in for this is required for the interoperability to work - refused to attend the workshop’s body charged with making interoperability work.
PEXA also sent letters to the NSW Registrar General and to the NSW Minister for Customer Service and Digital Government Jihad Dib, saying that they reserved the right to take legal action against the NSW Government if it kept pursuing interoperability. Perhaps it has happened before, but I certainly cannot recall a company threatening to sue a Minister and a Government for attempting to enforce a law impacted by parliament. This super ballsy and then there's PEXA ballsy.
As the website ARNECC makes clear, “Under Section 18A(1) of the National Law a person approved as an ELNO under section 15 of the National Law must, in accordance with the operating requirements establish and maintain interoperability between ELN operated by the ELNO and each ELN operated by another ELNO”. PEXA clearly regards Section 18A(1) as optional.
Phalanx of Lobbyists
To further throw sand in the gears of potential competition, PEXA employs of phalanx of lobbyists and consultants these include former NSW premier Morris Imma who mentored the current NSW premier Chris Minns and was an early backer of the current Labor member for the seat of Lakemba, one Jihad Dib. So on one hand PEXA lobbyists are there giving out how to vote cards for PEXA’s responsible Minister at NSW elections, and on the other hand PEXA’s Melbourne lawyers are sending him threatening letters. Some people might see this as a kind of a good-cop bad-cop strategy, but I would not stoop so low.
NSW is a critical state to win for PEXA as both Victoria and Queensland have granted PEXA formal waivers from having to comply with 18a. NSW is not only the largest property market in Australia it could make life difficult for PEXA if it enforced 18A, or perhaps banned any further price rises until PEXA allowed interoperability. One of the lines of argument that PEXA lobbyists used to bamboozle politicians and bureaucrats is that interoperability (competition) would cause chaos as tens of thousands of property settlements were stuffed up by two different software systems talking to each other. A system crash would turn into a political nightmare PEXA spinners argue as voters blame their elected representatives for undermining the integrity of the property market. This argument is of course complete poppycock. My learned geek friends who use artificial intelligence to build code for Fortune 500 companies reckon it would take less than three months coding to build a system that allowed PEXA and Simpli systems to communicate with each other.
Other influence peddlers on the PEXA teat include former Grattan institute CEO John Daley and Australia's largest lobbying firm TG Public Relations owned by law firm Thompson Gear, the home of ALP luminaries Stephen Conroy and Kim Beazley. TG is so far up the Victoria NSW Labor Party leadership you can barely see the soles of their highly renumerated consultants shoes.
Also on board the PEXA dark-ops team other quintessential Sydney spinners for hire Sue Cater and Clive Matheson plus Claire Gil the formula Regulatory Affairs Director of the Seven and Nine networks. If there is any State of Federal minister or backbencher interested in property settlements that hasn't been soiled by contact with one of PEXA arm twisters it's because they've been hiding under a rock. PEXA is so confident that is killed off competition completely in its latest market update it wrote off a sum of $14m, the amount it claimed to have spent on the interoperability system. If PEXA accounts are to be believed, interoperability has gone the way of Monty Python's Norwegian blue parrot. Farcically PEXA’s right down announcement included the statement that it would: “continue to engage constructively with regulators”.
The politicians have presided over this mess are now doing what politicians always do when they want to buy time and avoid responsibility. The NSW parliament has called an inquiry which submissions close on September 26. There is talk of reinvigorating the Senate inquiry into the issue of PEXA’s dominance, but a date is yet to be set. PEXA is also busily developing new commercial strategies to defeat Simpli. Even if the states do miraculously enforce interoperability the company is working on a series of add-ons to its systems including anti money laundering module and a real estate agent portal that will render Simpli’s offering obsolete. Long before it attempts to sign up its first customers PEXA has reportedly been working in partnership with Austrac and the AML module.
If PEXA follows the US tech giant broligarch business model it will eventually have dozens of add on apps and features that will mean anyone in the property industry will need up PEXA terminal on their desk just to stay in business. It's called client capture. Frustrated with four years of going nowhere representative of Simpli's leadership and shareholders have been visiting state government ministers and senior bureaucrats trying to work out the lay of the land. If those meetings revealed that PEXA has the state sewn up they'll probably pull the pin. Neither the ASX nor Chris Beck want to spend the rest of their days investing in a market entry that will never come.
The Australian share market is betting on the PEXA monopoly being confirmed. PEXA share price is up 25% this year and the company now trades on an EV/EBIT multiple of almost 59 times. Consensus forecasts predicted the companies EBITA margin will grow from 31% this year to just a whisker under 40 % by 2028. As far as the stock market is concerned Simpli and any chance of competition is already dead.
There must be among our Elites an unwritten Marquis of Queensberry rule that for the PEXA participants goes something like this: “Under no circumstances are retail shareholders, conveyancers, solicitors, members of the public or any other dumb f%&kers out there to have any clue as to what is really going on. It is just the way of the world that us sharks to tear each other to pieces and only a very few of us will emerge on top. However these shit-fights must always be done so deep down it cannot be seen. And under no circumstances are any participants to ever break the water’s surface.”
In an odd way it is kinda reassuring to know our politicians past and present, and their fellow travelers are out there doing what they have always done and do best - looking after themselves. I mean it would be unsettling if we found out any of these pricks actually had the interests of Australia foremost. Like Premier Lang said many years ago: “Always back the horse called self-interest, at least you know it is trying”.
All up, PEXA may well be a very good long-term investment.
