Mortgage company Yellow Brick Road went into a trading halt yesterday, flagging an announcement that it will apply to delist from the Australian Securities Exchange.
The company was founded in 2006 and listed on the ASX in 2008. The stock has never traded above its issue price of A$1 a share and in recent years it has bumped along in a range between 5 and 10 cents.
In 2018, YBR knocked back a takeover offer from Mercantile Investment Company, which valued the company at 9 cents a share, describing the offer as “grossly inadequate”. In hindsight, it looked about right.
YBR’s weak share price record is a fair reflection of its business performance. Its attempts to diversify its business beyond mortgage broking, including moves into wealth management and accounting, were not successful and it has been a consistent loss maker.
In recent years it has kept its focus on mortgage broking and origination but there have been disappointments there as well.
In 2019, YBR formed a joint venture, Resi Wholesale Funding, with asset manager Magnetar Capital to launch a mortgage-backed securitisation program.
The company reported that at June 30 the value of the securitised book was $360 million – not much to show after four years.
Another initiative, digital mortgage broking business Y Home Loans, was launched in 2022 but was not mentioned in the company’s 2022/23 financial report or investor presentation.
Another issue is that founder Mark Bouris occupied the roles of chief executive and chair from the get-go. As a listed public company, YBR should have had better governance standards.
With a long history of failing to deliver, investors have walked away from the company. The big question now is what liquidity options will be offered to those left on the register.