"AUSSIE" John Symond, famous for rallying against the big banks nearly two decades ago, has netted more than $160 million by selling a bigger stake of his mortgage broking business to Commonwealth Bank.
CBA, the country's biggest bank, is set to increase its holding in Aussie Home Loans to 80 per cent.
The banking major already owned a third of Aussie Home Loans, buying into the mortgage broker at the height of the global financial crisis.
The sale was for an undisclosed amount, but BusinessDay believes the deal cost CBA in excess of $160 million. CBA declined to comment, but said the price tag - which also gives it an option to move to 100 per cent - was not material to earnings.
Mr Symond will continue as executive chairman of Aussie and will retain the outstanding 20 per cent shareholding while continuing to be involved in the growth and direction of the company.
With the catchcry "we'll save you", Mr Symond is widely known as breaking the banks' stranglehold on the home loan market in the 1990s.
He said consumers would be oblivious to the ownership change, insisting Aussie's integrity would remain intact.
"Give it a month and ask the consumer in the street, they wouldn't have a clue who owns what," he said. "They just want the best deal they can get."
The investment by CBA was a great opportunity for the mortgage broker to accelerate its growth, Mr Symond said.
Even with the business majority owned by Commonwealth Bank, Aussie will continue to sell home loans through its panel of 18 lenders.
Given CBA chief executive Ian Narev played a key role in the acquisition of the stake in Aussie Home Loans in late 2008, analysts have long speculated that he was likely to move to a full buyout, or at least lift his holdings in the business.
But banking analysts - who have valued Aussie at between $350 million and $400 million - treated the acquisition with caution, saying it would be hard to boost Aussie's profits in the face of a slowing mortgage market.
The slowdown has put Aussie's earnings under pressure. Last year the business returned a profit of $32.6 million, down from $51.7 million a year earlier.
The business last year had net tangible assets of $138.5 million.
CBA group strategic development head Rob Jesudason said the transaction reflected the "strength and reputation" of the Aussie brand and name in the Australian mortgage market.
The acquisition of the majority stake remains subject to approval from the Australian Competition and Consumer Commission.
Frequently Asked Questions about this Article…
What happened in the Commonwealth Bank takeover of Aussie Home Loans?
Commonwealth Bank (CBA) agreed to buy a bigger stake in mortgage broker Aussie Home Loans, increasing its holding to 80% with an option to move to 100%. The exact sale price was not disclosed, though BusinessDay reported the deal cost CBA in excess of $160 million. CBA said the price was not material to earnings and the transaction is subject to Australian Competition and Consumer Commission (ACCC) approval.
How much did "Aussie" John Symond make from selling part of Aussie Home Loans?
John Symond, the founder often called "Aussie," netted more than $160 million from the sale of a larger stake to Commonwealth Bank. He will remain executive chairman and keep the outstanding 20% shareholding while staying involved in the company’s growth and direction.
Will Aussie Home Loans continue to operate independently after CBA's investment?
Yes. According to the article, Aussie will continue to sell home loans through its panel of 18 lenders and John Symond insists the business’s integrity will remain intact, so everyday customers should see little change in how Aussie operates.
Does the change in ownership affect Aussie customers or the mortgage deals they get?
The article says consumers are unlikely to notice the ownership change and will still be able to seek the best deal. John Symond commented that customers typically focus on the best loan outcome rather than who owns the broker, and Aussie will keep its lender panel in place.
What are analysts saying about the value of Aussie Home Loans and future profit prospects?
Banking analysts valued Aussie at between $350 million and $400 million but were cautious about the acquisition, noting it may be hard to boost Aussie’s profits amid a slowing mortgage market.
What recent financial numbers for Aussie Home Loans should investors know?
Aussie’s profit fell to $32.6 million in the most recent year, down from $51.7 million the year before. The business reported net tangible assets of $138.5 million.
Why did Commonwealth Bank want a bigger stake in a mortgage broker like Aussie?
CBA described the transaction as reflecting the strength and reputation of the Aussie brand and said the investment was a significant opportunity to accelerate the mortgage broker’s growth. The article also notes CBA CEO Ian Narev had played a key role in the bank’s earlier investment in Aussie in 2008.
Is the CBA–Aussie deal final, and what approvals are required?
The acquisition of the majority stake remains subject to approval from the Australian Competition and Consumer Commission (ACCC). Until regulatory approval is obtained the deal is not fully finalised.
Call 1300 880 160
Start a chat
Schedule a call
