Member-owned sub-aggregator Purple Circle has announced solid growth since its foundation in August this year, settling more than $20 million in loans in its first few months of operation.
Launching with a ‘write loans, get shares’ model, more than half of its initial Foundation Member shares have been snapped up by brokers joining the firm.
“The take-up of our offering has been nothing short of fantastic,” said CEO Michael Stephens. “We were confident a non-aligned member-owned offering would resonate with finance brokers Australia-wide, but we couldn’t have envisaged such a positive and immediate response.”
“Of the initial 20 Foundation Memberships available, we currently have 11 member businesses that have joined,” Stephens told Australian Broker
. “With four, we are in the final stages of completing contracts while with several others we are trying to negotiate exits from draconian handcuff agreements.”
These member businesses were both individual brokers and broking firms, he added. Foundation members will receive a once off equity in the company as an added early bird incentive.
Starting off with zero members, Purple Circle has seen steady growth, welcoming brokers from Western Australia, Victoria, New South Wales, Queensland and South Australia.
When asked how the ‘write loans, get shares’ model worked, Stephens replied: “The shares are held by a unit trust which can issue an infinite number of units. The units are issued at the end of each year in proportion to the value added so the ownership is kept in proportion to the valued added over time.”
This model works to attract brokers who are disenfranchised with large institutionally-manipulated aggregators, he added.
“What we keep hearing from brokers is that they’ve had enough of being played like puppets by their aggregator partners – from being used as guinea pigs for direct-to-consumer online platforms, which are also broker-excluded, to being manipulated by white-label loans and more, none of which have the broker’s interests at heart.”
With institutions having an interest in aggregation companies, this was not a good thing for both brokers and clients, he said.
“You only have to look at the carnage that’s been caused in the financial planning sector to see that.”
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