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The ASX-listed aggregator has acquired an asset finance aggregation company.
Australian Finance Group (AFG) has announced the acquisition of a 75 per cent stake in asset finance aggregator National Finance Alliance Pty Ltd, trading as Fintelligence.
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Fintelligence will remain as a brand in the marketplace. The management team and staff in Queensland and Victoria will also continue to operate as they do now.
The deal was made for $52.5 million (funded primarily by a new corporate debt facility) and gives AFG an exclusive option to acquire the remaining 25 per cent interest in Fintelligence over the next three and a half years (with value linked to Fintelligence achieving agreed milestones).
It is expected to complete by 31 December 2021, subject to confirmatory conditions precedent.
Together, the combined group will have more than 3,335 brokers and will deliver combined asset finance settlements of more than $1.7 billion per annum, based on combined, proforma results.
According to AFG, the stand-alone financial year 2022 NPAT for Fintelligence is forecast to be $6.6 million.
The group said that the acquisition will assist AFG in future recruitment and drive market share in the asset finance sector, particularly noting Fintelligence’s “advanced, scalable and proprietary asset finance platform”.
It will also provide exposure to the retail asset finance market through Fintelligence’s retail broking business, Broli.
The combined group will feature an in-house referral service for AFG’s existing network of residential brokers to provide choice for consumers via a trusted partner.
AFG said the deal also builds scale for the future establishment of an asset finance warehouse and white-label products to drive meaningful revenue synergies.
AFG chief executive David Bailey said: “This acquisition represents a significant opportunity to build a fast growing, technology-enabled asset finance aggregation business of scale. It will drive growth in AFG’s asset finance volumes, market share for the combined group, and more lender and product opportunities for brokers and their customers.
“In addition, the acquisition allows AFG to increase the availability of white label and securitised asset finance products to meet the needs of our brokers and customers.”
Mr Bailey added that the transaction represents an opportunity for all AFG shareholders to benefit from the diversification and flexibility of the combined group.
“The transaction aligns with AFG’s strategy to grow distribution and invest in manufacturing capability across multiple asset classes,” he said.
“This transaction will increase our existing footprint in the Australian asset finance market further enhancing competition amongst major and non-major lenders.”
The CEO noted that there was a “strong cultural alignment with the Fintelligence team” and said the “well-[respected] management team” would remain in the business “and ensure a continued focus on delivering value to brokers and their customers”.
Co-founder Richard Burgess and Greg Bellchambers, the head of digital at Fintelligence, commented: “The partnership with AFG will enable Fintelligence to create additional value for our partners through the development of a new white label loan product and a continued focus on technology to improve broker efficiencies through our existing technology platform, Ambition Cloud®.”
Darren Rumble, Fintelligence head of partnerships continued: “This represents a great opportunity to become the leading aggregator partner across all sectors allowing AFG and Fintelligence clients to maximize their customers’ choices through product, service, innovation and industry leading technology. It’s going to be an exciting 2022 and beyond.”
Mr Bailey concluded: “I look forward to working with the Fintelligence management team and network of brokers to help fast-track growth and drive greater competition in the Australian asset finance market.”
The move comes amid a trend of consolidation in the mortgage and finance broking industry.
AFG had previously hoped to merge with major aggregation company Connective, however, this deal was stymied following delays from the courts that resulted in the scheme deed expiring.
In the past 12 months, other groups have merged with one another.
Major franchise group Aussie merged with digital brokerage Lendi to form the Lendi Group, while Loan Market Group acquired 100 per cent of three broker aggregation businesses: Choice Aggregation Services, FAST and PLAN Australia from National Australia Bank to form The Loan Market Group.
Two other major franchise groups, Mortgage Choice and Smartline, will also merge under the Mortgage Choice brand from next year, after having been acquired by the REA Group for its financial services business.
Last week, it was announced that franchise brokerage MoneyQuest had acquired sub-aggregation group Buyers Choice from shareholders.
In the asset finance space there have also been notable changes, including the 2020 move by commercial finance and insurance brokerage QPF Finance Group to acquire an 80 per cent interest in Access Capital Pty Ltd (Access).
[Related: MoneyQuest acquires Buyers Choice]
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