Homeloans and RESIMAC, two of Australia’s major non-bank home lenders, have finalized a $135 million merger to form a bigger rival to banks in the mortgage market.
Homeloans is the object of a reverse takeover by RESIMAC, which will control 72.5 per cent of the merged group. RESIMAC’s chief executive Warren McLelland will serve as CEO of the merged group. Homeloans will be issuing new shares to RESIMAC’s owners, with the merged group remaining on the ASX under Homeloans’ listing.
According to Homeloans, the tie-up will help the company gain access to RESIMAC’s securitisation program to finance new lending while the entity would expand distribution channels to originate new loans.
“We as an organisation can unlock value in RESIMAC that they couldn’t unlock themselves and vice versa,” said Homeloans chief executive Scott McWilliam. “While we are in the same sector and selling the same product, our expertise are in different parts of that process.”
This deal brings together the two loan providers in spite of their very different business models. While Homeloans focuses on writing mortgages using wholesale funding, RESIMAC uses securitisation to fund its home loans, meaning individual loans are bundled together and sold to investors as a mortgage-backed security.
The two companies have issued a combined total of over $3 billion in new loans over the past financial year, and they have a combined profit of nearly $14 million in the 2014-2015 financial year, making them small players in the mortgage market dominated by Australia’s big four banks.