ASX-listed lender and brokerage group COG Financial Services Limited (COG) has announced that its 75 per cent-owned subsidiary Westlawn Finance Limited has agreed to acquire 100 per cent of the issued capital of non-bank lender Equity-One Mortgage Fund Limited (Equity-One).
Equity-One operates a contributory mortgage scheme and has approximately $350 million of funds under management.
Under the proposed transaction, Westlawn would look to acquire 70 per cent of the issued capital in Equity-One for a cash consideration of $24 million on 1 March 2022 (subject to satisfaction of certain conditions) with the remaining capital acquired over three additional tranches (subject to option exercise) over several years afterwards.
As well announcing the new deal, COG has also confirmed that it has established a $31 million acquisition finance facility with a “major Australian bank” (undisclosed).
The five-year facility has been put in place to help the group continue its “acquisition led growth strategy”, according to COG chief executive Andrew Bennett.
The CEO commented: “This is a major milestone for COG. The facility will enable COG to continue its acquisition led growth strategy by allowing it to acquire additional asset finance businesses to the value of $31 million without the need to raise additional equity.
“In the last six years, COG has grown its share of the broker asset finance market to 18 per cent, and the establishment of this facility will enable us to continue to focus on the current pipeline of acquisition opportunities so that we will be the dominant player in the space.”
COG – which operates an asset finance broking and aggregation service and commercial and mortgage lending through the broker channel via its subsidiary Westlawn Finance Limited has been rapidly growing its base in recent months.
Last year it took up greater shares in a number of its part-owned subsidiaries, and now fully owns asset finance aggregation group Platform Finance.
According to its financial year 2021 results, brokers operating under its finance broking and aggregation companies (including Consolidated Finance Group, Platform Finance Group, Centrepoint Finance, QPF Finance Group and Linx Australia Group) settled $5.2 billion in FY21, an increase of 14 per cent on the prior year, driven by strong demand and as a result of the group’s continuing acquisitions.
It is estimated that the group now has just over 3,000 brokers in its network, making up 18 per cent market share of broker-originated asset finance.
However, the group is said to be targeting 30 per cent market share, representing net asset finance of approximately $6.5 billion – both through organic growth, as well as acquiring strategic stakes in complementary businesses.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.