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An affiliate of a global alternative asset manager has officially assumed a 50 per cent stake in YBR subsidiary Resi.
Yellow Brick Road (YBR) has announced that it has completed its transaction with affiliate of global alternative asset manager Magnetar Capital (Magnetar) relating to a joint venture designed to establish a mortgage-backed securities securitisation business.
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As part of the agreement, US-based asset management business – which has approximately US$12.9 billion in assets under management – has now assumed 50 per cent ownership of YBR subsidiary Resi Wholesale Funding (RWF), which will be trust manager, servicer and sponsor of the residential mortgage-backed securities (RMBS) securitisation business.
In addition to assuming a 50 per cent stake worth approximately $18 million, Magnetar has agreed to provide a facility for $6 million in future funding for B Class Notes for the RMBS facility.
The firm has also conditionally committed to provide and/or arrange a facility for approximately $60 million in future funding under subordinated notes for the RMBS warehouse facility.
Following the completion of the transaction, YBR executive chairman Mark Bouris said: “This equity injection is an essential part of funding for the Resi securitisation business.
“As I have previously said, the combination of Magnetar’s capital and the YBR group’s mortgage distribution capabilities, plus our joint experience in the securitisation markets, will make for a formidable new funding force in the Australian mortgage market,” he said.
“We are now ready to begin.”
The announcement comes less than a week after Resi signed final definitive legal documentation for a $120 million RMBS warehouse facility from an undisclosed Australian bank.
Last week, the group also released its results for the first half of the 2020 financial year (HY20).
YBR posted a profit after tax of $3.97 million, up from a loss of $34.1 million in the previous corresponding period.
The group’s underlying earnings before interest, tax, depreciation and amortisation rose to $238,000, up from a loss of just over $2 million in the previous corresponding period.
According to YBR, the turnaround in the group’s performance reflected:
- a 2 per cent increase in revenues from ordinary activities to $86.1 million;
- net cash from operating activities of $1 million, compared with a net outflow of $366,000 in the prior period;
- a 17 per cent decline in underlying expenses; and
- the sale of its 50 per cent share in Smarter Money Investments (SMI) for $7.5 million.
As at the close of HY20, YBR’s cash at bank totalled $9.3 million, up from $4 million as at 30 June 2019.
YBR also expects to receive approximately $5 million during the next 18 months from revenue owing to the sale of the SMI shareholding and the Wealth division.
[Related: YBR signs $120m RMBS deal]
