- Australian Finance Group is set to merge with the aggregation business Connective, purchasing the mortgage broker for $120 million
- The combined companies will give AFG access to over 6575 brokers and $76 billion in mortgage settlements for the 2019 financial year
- AFG’s share price is up 11.82 per cent at today’s market close, bringing it to $2.27 apiece
Australian Finance Group (AFG) is set to merge with Connective, a mortgage aggregation business, in a multi-million dollar deal.
AFG will buy Connective for $120 million, with $60 million being in cash and the other half coming from the issue of 30.9 million AFG shares.
As the two companies combine, it sets AFG up with access to over 6575 brokers and mortgage settlements of $76 billion for the 2019 financial year.
AFG’s CEO David Bailey said: “The prospect of complementing AFG’s existing business with the cultural fit and similar customer-focused philosophy of the Connective business is compelling”.
According to the company, having a holding in a significant national broker distribution network will drive greater competition in the home loan market, and expand choice for brokers and consumers.
Chairman of AFG Tony Gill said “the expanded distribution channel and broader diversification of products the combined group can supply will provide greater choice for both brokers and consumers”.
Additionally, AFG recognises its potential to distribute its products across Connective’s established platform and gain further insight into Australia’s mortgage market.
Tony added, “the merged business will have a significant footprint in Australia’s $1.8 trillion home loan market. The delivery of competition and choice to the Australian lending market is at the core of our strategy”.
Combined metrics for the two companies include $70 billion in residential settlements and $6 billion in a commercial settlement. While the loan books total $163 billion.
Profits after tax are at $44 million between AFG and Connective and revenue for the 2019 financial year totals $706 million.
Connective’s CEO Glenn Lees said “the coming together of the Connective and AFG teams is a natural fit. We share a strong set of values, with the priority to always work on behalf of our brokers.
Glenn will be offered a position on AFG’s board upon the completion of the transactions.
AFG’s share price is up 11.82 per cent at today’s market close, bringing it to $2.27 apiece.