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Macquarie Bank has secured a stake in aggregation group Connective, with the deal extending the bank’s footprint within the broker channel.
Speaking to The Adviser, Connective director Murray Lees confirmed the deal went through on Tuesday, with the bank taking a 25 per cent interest in the aggregation business. According to Mr Lees, the bank’s new shareholding will give Connective significant firepower, allowing it to continue its stellar growth.
“I’m flattered that Macquarie recognised what we’ve built here. It’s not just about the growth of the business; Macquarie understands the culture and the ethos that has evolved over the last 10 years,” Mr Lees said.
“Macquarie is a big supporter of this industry. The bank has shown its commitment to third party distribution and that makes it the perfect partner for Connective.”
Connective was established in 2003 and over the past decade has risen to become one of the most influential independent aggregation businesses in Australia. An estimated 1,900 members now settle in the region of $1.4 billion in loans each month with a loan book of $45 billion. The group was also recognised as the Australian Broking Awards' Aggregator of the Year and the MFAA Wholesale Aggregator of the Year in 2013.
Macquarie was not the first bank to approach Connective, according to Mr Lees, but it was the first with an offer that made sense for the business and its members.
“We’ve spent 10 years building Connective and we now have a partner that has significant capacity to help ensure that we continue to grow. Macquarie’s research capabilities as well as its strategic thinking were a major factor in the deal and this will be important in helping us drive continued sustainable growth,” he said.
The share in Connective is the biggest investment Macquarie has made in the aggregation space.
The bank already has around a 10.5 per cent share in Yellow Brick Road, and a minority shareholding in Vow Financial and AFG. It also has a 17.5 per cent stake in Bluestone and a 19.8 per cent investment in ASX-listed non-bank lender Homeloans Ltd.
Speculation surrounding bank takeovers of the remaining independent aggregation and broker groups has been rife since NAB first swooped to take FAST, PLAN and Choice from Challenger Mortgage Management in October 2009. More recently, in 2012, CBA upped its stake in Aussie to 80 per cent with a view to subsequently acquiring the business in full.
“Over the years we’ve been approached by a number of institutions; however, the proposition Macquarie offered was the first that aligned with our objectives.” Mr Lees said.
At this stage, there are no plans for Macquarie to increase its shareholding and it would continue to be “business as usual” for Connective.
“Mark, Glenn and myself will continue to run the business but with the support of a significant investor,” Mr Lees said.
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