It will be business as usual for an Australian mortgage technology company which just got snapped up by a bigger fish.
Stargate Information Systems CEO Brett Spencer told Australian Broker
that nothing will change structurally within his company, although it was bought by Australia’s largest financial services software group Rubik Financial on 3 June.
“There’s no change, it is business as usual. Same staff, same offices, same address, same name,” said Spencer, who has been appointed as managing director of Rubik’s mortgage section.
Stargate and Rubik have been in acquisition talks for “somewhere in the vicinity” of six months, and Spencer said he was not going to rush into selling to just anyone.
“I’ve always said we would sell for the right price to the right people. So it’s not just about what price, as a private company, we could get, but it needed to be the right fit.
“Rubik has aligned visions, industry credibility, is in the financial services space and provides good service to the industry. So we thought it would be a good choice to take Stargate to the next level.”
Rubik bought Stargate for $20 million upfront, with further payment of up to $15 million – so long as earnings remain above $3.2 million in the 2015 and 2016 financial years.
Its ASX release referred to the acquisition being able to generate “significant additional synergies” over time.
Spencer clarified that this means the platforms merging “basically allow brokers to sell more stuff and make more money”.
As the mortgage broking industry trends towards diverging into financial planning and insurance advice as part of a ‘one-stop shop’ service, technology will need to keep up.
“It gives brokers a huge cross-section of diversification between the broking and wealth platforms, with [loan management tool] Symmetry and [wealth management platform] COIN now being part of the same family. It will most definitely help brokers to expand,” Spencer said.
Rubik has also entered a binding agreement to acquire another mortgage platform, Infinitive, for an upfront payment of $2.4 million and up to $14.1 million more over the next 18 months, subject to increased revenue.
“Having Infinitive as part of the stable provides a viable alternative solution to the current industry suppliers,” Spencer said. “Clients can now do end-to-end processing using a single platform.”
Rubik said it has jumped on a “rare opportunity” to acquire both companies in a single move, thus establishing scale, revenues, profits and relationships instantly.
“For mortgage brokers, I would say it is the single best thing that has happened in the industry for a long time,” Spencer said.
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