Australian Finance Group yesterday announced that it will seek to acquire non-controlling equity stakes across its network of mortgage broking businesses.
AFG CEO David Bailey said “the company’s strong balance sheet meant it had access to funding which could be used to take equity positions in well-run, growth-minded broker businesses across Australia.”
Bailey said AFG had been testing the market and found a strong appetite for investment, with active discussions underway.
“What’s your budget?” Banking Day asked Bailey.
“We’re not disclosing that” he said.
“Our 30th anniversary is coming up, and we’ve had brokers with us for that period of time. Some of them are looking for exits.
“It’s only natural given how established the industry now is, that demographics are changing, and through AFG investing in its brokers’ businesses we are helping to facilitate succession planning for some and expansion for others.”
Bailey said he anticipated the mortgage broker share of residential loans would continue to rise, to a range of 80 per cent to 85 per cent, up from a 74 per cent market share currently.
AFG has appointed Vik Sukumaran to lead a newly created Broker Investments team responsible for delivering and managing these investments. Sukumaran, AFG said, brings over two decades of transaction and corporate advisory experience, including as general manager of operations and acquisitions at insurance intermediary Steadfast Group, and senior manager at BDO.
Bailey said AFG was in discussions with the first few prospects.
He said AFG’s value proposition would remain the same for all brokers, irrespective of whether AFG was a shareholder.
AFG has associations with around 4000 brokers.