Announcement highlights
Acquisition
- MA Financial Group to acquire 100% of Finsure for $145.0 million1
- Finsure is a leading Australian mortgage aggregator with a lending portfolio of $60.8 billion
- Provides a scalable, technology-enabled platform with a market-leading management team focused on the c.$2 trillion residential mortgage market.
Guidance & Equity Raising
- FY21 Underlying EPS growth expected to exceed the upper end of prior 30% to 40% guidance range2
- FY22 Underlying EPS expected to be up 15% to 25% on FY21 result inclusive of Finsure acquisition3
- Acquisition funding to be supported by an underwritten institutional placement to raise approximately $100 million and a non-underwritten Share Purchase Plan to raise up to $10 million.
MA Financial Group Limited (“MA Financial” or the “Group”; ASX:MAF) announces it has entered into binding agreements with BNK Banking Corporation Limited (“BNK”; ASX:BBC) to purchase BNK’s mortgage aggregation business, Finsure Holding Pty Ltd and its subsidiaries (“Finsure”), for $145.0 million1.
Overview of Finsure
Finsure is one of Australia’s leading mortgage aggregators, operating a technology-enabled, proprietary platform focused on the mortgage market. Finsure's platform allows its network of more than 2,000 mortgage brokers to access an integrated panel of approximately 65 lenders (including all major Australian banks) offering more than 4,800 loan products. It manages a loan book of $60.8 billion with a run-rate of approximately $34 billion settlements per annum4. In addition to loan product sourcing and evaluation, it provides a range of other mortgage value chain services, such as loan lodgement, marketing, compliance, training and commissions management for its broker network.
Finsure has exhibited significant year-on-year growth, with its originated loan book increasing 27.9% in the 12 months to September 2021. Continued momentum in the business is expected through FY22 and beyond driven by a strong management team and favourable market dynamics supporting continued growth in the proportion of residential mortgages originated via broker networks and Finsure continuing to increase its market share.
Overview of transaction
MA Financial and BNK have entered into a Share Sale Agreement (“SSA”), which will see MA Financial acquire 100% of Finsure for $145.0 million5 on a cash and debt free basis, following regulatory approval from APRA. Regulatory approval and completion are expected to occur in late 1Q FY22.
An underwritten institutional placement will be conducted to raise $100 million at $7.75 per share. Following settlement of the Placement, MA Financial will have approximately $217 million in cash or near equivalents6 to fund the settlement of Finsure and support future growth initiatives. A non-underwritten Share Purchase Plan will also be offered to MAF investors to raise up to $10 million.
MA Financial Trading Update
Upgrading FY21 guidance and FY22 outlook
The business continues to perform strongly. FY21 Underlying EPS growth is now expected to exceed 40% on FY20 compared with previously provided guidance for 30% to 40% growth on FY20.
Key business highlights include:
- Execution of a strong Corporate Advisory and ECM transaction pipeline including being sole financial advisor to Johns Lyng Group on the acquisition of Reconstruction Experts and joint underwriter to its associated $230 million equity raising and the successful completion of the $128 million IPO of Newmark Property REIT
- Assets under Management (AUM) of $6.8 billion at 30 November 2021
- Net fund inflows into the Group’s diversified investment strategies of more than $1 billion over FY21 to date, well above $330 million of net inflows over the same period in FY207
- A return to strong trading performance of the Group’s hospitality venues since reopening post September quarter COVID-19 related lockdowns
- Continued momentum in growing the Group’s listed equities investment strategy, with Assets Under Management now in excess of $800 million, underpinned by strong portfolio performance
- Cash or equivalents balance of $120 million ($217 million pro-forma post equity raising6) at 30 November, after successfully converting over $85 million of asset investments to cash in 2H21.
Strong business momentum is expected to continue into FY22. The Group has confidence to provide guidance for FY22 Underlying EPS growth of 15% to 25% above the expected FY21 result. This is inclusive of the financial impacts of the Finsure acquisition, which is expected to be circa 5% accretive to FY22 Underlying EPS8.
This outlook is subject to market conditions, deal completion rates and timing, no material regulatory change, no further significant COVID-19 related business disruptions and completion of the Finsure acquisition.
You can access the the full ASX announcement and presentation via the MAF Shareholder Centre
1. The acquisition value of $145m is on a cash-free, debt-free basis, and excludes c.$6m of cash on Finsure balance sheet
2. The number of shares used in the EPS calculation is the estimated total weighted average number of ordinary shares in FY22 (net of treasury shares)
3. Based on MA FY22 forecast including estimated pro-forma financials for Finsure and MA’s view on completion in late 1Q FY22. The number of shares used in the EPS calculation is the estimated total weighted average number of ordinary shares in FY22 (net of treasury shares) including an estimate of new shares to be issued in relation to the Placement
4. Based on Finsure’s September 2021 quarterly performance, Finsure Q1 Trading Update
5. The acquisition value of $145m is on a cash-free, debt-free basis, and excludes c.$6m of cash on Finsure balance sheet
6. Pro-forma cash balance reflects impact of $100m institutional placement less capital raise costs of c.$3m
7. FY20 flows impacted by $130 million institutional outflow from successful realisation of construction financing loan transactions
8. Based on MA FY22 estimated pro-forma financials for Finsure and MA’s estimate of completion in late 1Q FY22. Number of shares is the estimated total weighted average number of ordinary shares in FY22 (net of treasury shares) including an estimate of new shares to be issued in relation to the Placement
Important Notice
This announcement may not be released or distributed in the United States or to US Persons.
This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction in which such an offer or solicitation would be illegal. The New Shares have not been, and will not be, registered under the US Securities Act of 1993, as amended (“US Securities Act”) or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to US persons (as defined in Rule 902(k) under the US Securities Act) (“US Persons”) except pursuant to an exemption form, or in a transaction not subject to, the registration requirements of the US Securities Act and any other applicable securities law of any state or other jurisdiction of the United States. Accordingly, the New Shares to be offered and sold in the Placement may only be offered and sold to non-US Persons in offshore transactions in reliance on Regulation S under the US Securities Act. The New Shares to be offered and sold in the SPP may not be offered and sold to any US Person or any person that is acting for the account or benefit of a US Person.
This announcement contains certain “forward-looking statements”. Forward-looking statements can generally be identified by the use of forward-looking words such as ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘outlook’, ‘guidance’, ‘potential’ and other similar expressions within the meaning of securities laws of applicable jurisdictions and include, but are not limited to, statements relating to estimates, the timing and outcome of the Placement and SPP, the use of proceeds, and the future performance of MA Financial following the Placement and SPP. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.
The forward-looking statements contained in this announcement are not guarantees or predictions of future performance and involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of MA Financial, its directors and management, and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct. There can be no assurance that actual outcomes will not differ materially from these forward-looking statements. No representation or warranty, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in this announcement. The forward-looking statements are based on information available MA Financial as at the date of this announcement. To the maximum extent permitted by law, MA Financial and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligations or undertakings to release any update or revisions to the information to reflect any changes in expectations or assumptions.
Nothing contained in this document shall form the basis of any contract or commitment, or constitute investment, legal, tax or other advice. You should make your own assessment and take independent professional advice in relation to the information and any action taken on the basis of the information.
