October 30

Computershare Limited (CPU): At your service

Computershare Limited (CPU) is a provider of services which includes Issuer services, Mortgage Services & Property Rental Services, Employee Share Plans and Voucher Services, Business Services, Communication Services and Utilities operations and Technology Services. The sale of Computershare’s noncore U.S. mortgage servicing business, or CLS U.S., is a positive development. Mortgage servicing is the only unit within Computershare that consistently incurs losses at the EBIT level, excluding margin income. The sale will release capital for higher-returning investments, enabling management to strengthen its core businesses: share registry, employee share plans, and corporate trust. CLS U.S. will be sold to Rithm Capital, an asset manager focused on real estate and financial services sectors. We expect the sale will be completed by management’s fourth quarter of FY24 estimate. This transaction is inconsequential to our $25 fair value estimate and shares are trading broadly in line with our intrinsic assessment.

Its announced sale offers shareholders swift monetisation of the asset and reduces future uncertainties. There are undisclosed remnant expenses, though they are expected to be offset by likely benefits of Computershare’s transitional services agreement with Rithm and further cost-reduction plans. The sale of CLS U.S. is expected to lift Computershare’s operating margins to 38% per year, on average, over the five years to FY28. Proceeds from the sale will support complementary acquisitions, organic growth investments, and shareholder returns including the $750 million buyback.


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