The Aussie story

Aussie was a latecomer to the deal, but it was an opportunity that the growing brokerage knew would significantly boost its recently launched retail channel.

A closer look at Aussie’s swift acquisition reveals just how different the outcome could have been for Wizard Home Loans.

Initially, it was NAB who was aggressively chasing Wizard and were favoured to win the race, even announcing its plans to the ASX on 17 December 2008.

According to Mr Symond, NAB had been stalling on the deal when Aussie saw an opportunity to strike.

“We came late to the deal; we recognised that it was an opportunity that was very interesting for our business and our retail strategy,” he says. “We also recognised that things were stalling with NAB.”

With a good team behind them, Aussie “gave it a shake” as Mr Symond says and managed to secure the deal, which saw 99 Wizard branches and almost 200 mortgage brokers join Aussie’s 24 existing retail franchises.

Mr Symond remembers making the call to a senior executive at NAB Broker.

“I rang and said I had something to tell him,” he says. “The executive said ‘Not now James, I’m running to an important meeting’. He was basically heading to the meeting that would tell him the deal was over and Aussie had bought Wizard.

“I said ‘Stop mate – the meeting you’re going to is to do with me.’ And he’s gone: ‘You’ve bought Wizard?’”

The speed with which Aussie acted to procure the group is worth noting, given that it was the first time the brokerage had veered from its organic growth path. The synergies between the two businesses were also undeniable.

“The Wizard culture was far more like Aussie’s than you could imagine,” Mr Symond says.

“Most of the people at Wizard were great people, but they considered themselves our enemy.

“They had to swallow their pride a bit and have their absolute key competitor buy them.”

After signing on the dotted line for approximately $30 million, Mr Symond admits he thought the hard work was over.

“I remember on the day the deal was signed having a senior executive with CBA putting his arm around me and saying, ‘Well done, congratulations! Now the heavy lifting begins’,” he says.

“I didn’t know what he meant because up until that time we had only ever grown the business organically from a handful of team members.

“To me, the hard work was buying the business. But the hard work had only just begun because it was all about the amalgamation and making sure that everyone got what they needed out of the deal – whether it was the franchisee, whether it was John Symond or the GE people selling the business.

“It was a complicated thing to make sure we integrated it well.

Five years on

If there is one indicator of a successful integration, it’s the loan volumes being written through those Wizard branches five years later.

Aussie’s retail channel now has 160 franchise stores and 448 mortgage brokers, of which just over 40 per cent are ex-Wizard branches.

“Due to the ability of our Wizard franchisees to successfully leverage the Aussie brand, adopt our vision and immerse themselves into our culture, their average monthly lending volumes have skyrocketed from $1 million to $5 million per store,” Mr Symond says.

“That’s five times the volume in just five years,” he says. “The results speak for themselves.”

Two things made the integration a success, Mr Symond explains. One was having a crystal clear direction and strategy of where Aussie was going. The other was making sure it recruited and retrained the best brokers it could, according to culture.

“Culture in my mind is what defines great businesses,” Mr Symond says. “Culture is what ultimately defines successful mergers and acquisitions.”

One standout success is Aussie Parramatta, a former Wizard outlet, run by brothers Scott and Ross Le Quesne.

The store was named Aussie’s top franchise in 2013 and is on track to take the title again in 2014 (over the last year Aussie Parramatta’s lending volume has risen 46 per cent from $150 million to $220 million).

“There is no doubt that Aussie‘s acquisition of Wizard provided a major boost for us and other former Wizard franchisees,” Ross Le Quesne says. “Aussie’s ongoing support from business planning to sales and marketing has given us the thrust that helped us to transform our business,” he continues.

Aussie’s retail channel loan book has risen from $1 billion to $24 billion in five short years, with annual loan volumes expected to double from $5.2 billion in 2011 to over $10 billion by the end of the 2015 financial year.

“Aussie is all about one hell of a big brand and a very strong and diversified distribution network,” Mr Symond says.

“We’re not manufacturers, so at the end of the day we understand we’re a distribution business.”

By 2012, Aussie was ready for its next growth story. As Mr Symond says: “We needed a third channel.”

Buying and selling

Aussie was keen to start its own aggregation arm – or acquire one.

“I had known the National Mortgage Brokers (nMB) team for some time,” Mr Symond says. “They’re a sharp crew. I worked with Gerard Foley and his team and acquired them.”

Six months later, Aussie announced that the Commonwealth Bank of Australia would increase its holding from 33 per cent to 80 per cent, giving it a controlling stake in the company.

While the announcement has caused industry figures to form their own opinions on what this means for the mortgage broking industry, Mr Symond says there has been little interference in the business.

“So far, outside of a higher awareness of risk and compliance and some of the paperwork that goes with that, there has been zero influence in the field with our brokers in particular with any sort of big bank interaction,” he says. “And that’s the way we want it.

“CBA are a fantastic big brother to have. They are smart enough to know that if things are going well, leave it. I think that has been part of their successful strategy.”

CBA’s ownership of Aussie is often singled out as an example of an ever-increasing move by the big banks to buy up distribution.

“Whether you are AFG or Connective or the NAB channels, I don’t think there is a major broker in Australia without a bank on its register,” says Mr Symond.

“So it’s not who is the majority or minority owner, it’s the actions of the group,” he says.

“But it is always handy to have one of the biggest businesses in Australia as your parent.”

As the technology continues to shape the future of financial services, having Australia’s most tech-savvy bank as an owner positions Aussie to continue growing into the digital age.

“There is no doubt that CBA has made some excellent investment in technology that we haven’t even begun to see the positives of,” Mr Symond says.

“Particularly in the mortgage broking industry.”