- 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 & evaluation, it provides a range of other mortgage value chain services, such as loan lodgement, marketing, compliance, training & 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.