Firstfolio targets $30 billion by year end

Firstfolio chief executive Mark Forsyth will keep his company on the fast track with an ambitious plan to increase loans under management from $18 billion to $30 billion by the end of the year.

Last week the group completed the third of three merger agreements it announced in November, adding $6 billion of assets to its existing $12 billion mortgage portfolio after acquiring First Chartered Capital, Loan Services Australia's loan book, and Xplore Capital.

Firstfolio yesterday issued a bidder's statement with an offer to acquire all the issued shares in Xplore Capital, which has a $400 million loan book, for  $3.08 million.

The Xplore directors have recommended the offer, which has cash only and cash and scrip alternatives. The offer is conditional upon acceptance of a minimum of 75 per cent of the issued shares.

Xplore services Amway Australia's Independent Business Owners market.

The Firstfolio business includes mortgage aggregation, wholesale funding and an online direct to consumer service.

The aggregation business, which represents $14.5 billion of the total mortgage portfolio, services about 1000 brokers.

The wholesale lending business has funding from ING, Adelaide Bank and Origin. Firstfolio has its own sales force and works with partners.

The online broking business, eChoice, was acquired last July.

Forsyth describes this mix as a distribution platform for the delivery of financial products and services.

He said direct to consumer was the missing distribution channel and now that he has all the parts of the platform in place his plan is to keep his foot on the accelerator.

Forsyth said: "Organic growth will see us add $4 billion of loans under management this year, so we are still looking for acquisitions."

"Platforms are expensive so it makes sense to look for economies of scale. For every billion you grow you get leverage."

Firstfolio made a net profit of  $3.27 million in the 2008/09 financial year, after making a loss of  $1.1 million the previous year. The company expects net profit of $10 to $11 million in the current year.

"I can see only about 10 groups doing what we are doing in a few years. There will be the big four banks and five or six independents. The rest will be niche players.

"We plan to be one of the 10 and to stay on track to be there we need $30 billion by the end of the year. There is plenty on the radar."

While the dominant part of the Firstfolio business right now is aggregation, Forsyth sees the greatest potential in the online direct to customer business.

"The Australian mortgage market has been slow to take to the web. But I think we are at the tipping point. There is a definite move to the online channel."

On the wholesale side of the business, Forsyth said he had held talks with all three funders recently. "They have all said we can lend as much as we like.  Things have fired up."