Perth-based banking group, BNK, has announced plans to exit mortgage aggregation after striking a deal to offload its Finsure subsidiary.
BNK notified the ASX on Wednesday that it would be selling the Finsure business to MA Financial for a net price of A$145 million in cash.
The deal, which is subject to regulatory approvals, triggered a sharp rally in BNK’s share price, which closed up 16.5 cents or 16 per cent to a 36-month high of $1.20.
BNK acquired Finsure in 2018 as it was trying to fend off a takeover bid from the Kim Cannon-owned non-bank lender Firstmac.
While the combination of a regional WA bank with a mortgage aggregator did not generate improvements in shareholder returns promised by BNK management in 2018, the bank is set to harvest a large capital gain on the cash sale of Finsure.
The bank hinted that it may use some of the proceeds of the sale to fund capital returns to investors.
“The board will consider capital management options following completion of the proposed transaction,” the bank told the ASX.
“It is currently anticipated that a distribution in respect of a material portion of sale proceeds will be made to shareholders.”
Chairman Don Koch said BNK would be a strongly capitalised bank following completion of the sale expected early next year. “The company previously announced a strategic review to consider all options to maximise value for BNK shareholders.
“As part of that review, the board has carefully assessed a range of alternatives, including expressions of interest from a number of parties regarding BNK’s asset portfolio.
“After a detailed assessment, the board believes the sale of Finsure to MAF represents a compelling outcome for all BNK stakeholders, including shareholders, our people and customers.”
Finsure is one of the country’s largest mortgage aggregation platforms that services more than 2000 brokers.
MA Financial’s ASX-listed scrip entered a trading halt on Tuesday pending the release of details of the Finsure transaction to the market.
The acquirer announced it would launch a $110 million capital raising to fund the purchase.
Ord Minnett and UBS have underwritten a $100 million share placement scheduled to be completed in February.
BNK is being advised by Gresham and Allens on the sale.