Mortgage and wealth franchise Yellow Brick Road (YBR) has acquired privately owned South Australian non-bank lender Loan Avenue for $4.1 million.
YBR executive chairman Mark Bouris
said the acquisition of “one of South Australia’s top three non-bank lenders”, Loan Avenue, will help the franchise diversify its mortgage book geographically, diluting the reliance on Sydney and Melbourne mortgage markets.
“Loan Avenue is a respected B2B brand and has been in operation for ten years with a significant footprint, made up of more than 100 brokers in South Australia and Victoria. This acquisition allows us to quickly build more scale in South Australia, diversify and deepen our distribution network and funding relationships and increase our management capability,” Bouris said.
Loan Avenue’s mortgage product compatibility with YBR’s own mortgage manager, YBR Group Lending (formerly RESI Mortgage Corporation acquired in FY2014), also affords “simple integration minus the complexity that often comes with a scale acquisition”, Bouris added.
Loan Avenue founders and vendors Paul and Michelle Collins have agreed to stay on following the acquisition. They will assist in maintaining and driving existing aggregator and broker relationships as well as supporting integration.
“We are delighted to join such a fast growing and diversified group as YBR. Our focus will be to enhance our broker relationships and drive further product initiatives with YBR, whilst maintaining the high service levels for which we are renowned,” Paul Collins said.
The acquisition of Loan Avenue remains subject to a number of conditions precedent and, assuming the conditions are satisfied, completion of the acquisition is expected to occur on 31 May 2016.
The maximum aggregate consideration agreed to be paid for Loan Avenue is $4.1 million. The $2.6 million cash component of the acquisition will be funded out of the company’s existing cash reserves and undrawn portions of its CBA
The remaining will be funded by a deferred cash consideration and the issue of YBR shares.