iSelect buys Infochoice
Financial comparison website iSelect has quickly found a use for the A$30 million investment it received from a US private equity firm two months ago: ploughing the funds into a takeover of three niche retail finance businesses from Once.Once agreed to sell its ASX-listed subsidiary Infochoice to iSelect, along with BidMyLoan and Once Life, for $33.5 million, Infochoice announced yesterday. The privately held Once will retain its vendor finance business, Once Credit. Yanlord Holdings, a Singapore-based property developer, owns Once.The market capitalisation of Infochoice - a stock traded on a single occasion in the last year - increased eight per cent, to $21 million, yesterday, putting a notional value on the other two businesses of $12.5 million.Founded in the mid-1990s, Infochoice is one of three businesses that specialises in collating data on retail banking products and providing that at no cost to a consumer audience. Rivals include Canstar, which promotes its listing through the RateCity brand owned by NineMSN, and Mozo, a more recent entrant than the other two.Infochoice has struggled to make money. Its 2010 accounts show accumulated losses of $16 million and net equity of $2 million. It made a profit $100,000 in 2010, after making a loss of $600,000 in 2009, with the turnaround being thanks to a shift in business model to sell leads to banks (the same chief revenue model as that of its rivals).iSelect began life as a comparison service for health insurance 10 years ago but has since extended its coverage to car insurance, life insurance, travel insurance and broadband. iSelect's present home loan comparison offering is a lead generator for the Australian Finance Group.The group had turnover of $44 million in the year to June 2010, according to the revenue line in accounts filed with ASIC, though only $31 million in receipts are recorded in its cash flow statement (with the difference being due to the present value of trailing commissions).One assumption made since the conversion to a public company last year, and reinforced by the Spectrum investment, is that iSelect plans to list on the ASX in the next year or so.For Once, the sale of three of its four operating business generates cash for a firm that has struggled to develop a viable business model, based on its last published accounts.Accumulated losses for Once, at December 2009, were $135 million, while the financial statements show negative net assets of $85 million. The loss for the 2009 year was $18 million, half that of 2008.The 2010 accounts for Once are still being audited, though Once's CEO, Gary Howell, said the Once Credit business had a bright future, following the sale of its three associated businesses.