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Bank to raise $20m as it prepares to merge with aggregator

by Tas Bindi4 minute read

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A Western Australian bank has announced being on track to raise $20 million from a consortium of local and international investors as it looks to merge with an aggregator.

Goldfields Money disclosed to the ASX on Tuesday (4 September) that it has received binding commitments to the tune of $20 million (before costs) from local and international investors, through the issue of more than 15.3 million fully paid ordinary shares at $1.30 a share.

The capital raise will support the bank’s merger with mortgage aggregator Finsure, with Goldfields Money noting in a previous disclosure on 6 August that the funding is “intended to be used to ensure that the merged group maintains sufficient regulatory capital and to fund additional lending growth”.

The ASX disclosure states that the shares will be “issued contemporaneously with completion of the Finsure transaction”, with the net proceeds to help the Kalgoorlie-based ADI to pursue further lending growth.

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The merger now only requires shareholder approval and “largely procedural conditions”, according to Goldfields Money CEO Simon Lyons.

“The overwhelming support for our largest ever capital raise is a vote of confidence from new and existing Goldfields Money shareholders in support of the Finsure transaction, which will fast-track our growth,” Mr Lyons said.

Goldfields Money, which started out as a small credit union about five years ago and recently received approval to label itself a bank, presented a list of reasons to vote in favour of the merger with Finsure, including the expectation that the acquisition will provide the bank with access to diversified revenue streams, including aggregation, wholesale product offerings and loan writer subscription fees.

The bank last month booked a loss of $406,609 in FY18, after its profit was hit by $938,862 in bills related to a takeover offer by non-bank lender Firstmac Holdings and the impending merger with Finsure.

Goldfields Money also expects to benefit from the aggregator’s presence in the east-coast markets of the nation, noting that its loan book predominantly comprises loans from the west coast of Australia.

 

The bank is also predicting that it will benefit from partly funding Finsure’s wholesale and white label products, such as MyLoan, noting that the aggregator has written $32 million in wholesale products per month in the year ending on 30 June 2018.

According to its shareholder report, Goldfield Money’s intention is to “keep the banking and non-banking activities of the merged group operationally separate”.

“Growth in lending will be carefully managed to ensure compliance with Goldfields Money’s lending policies and APRA regulatory requirements (including the separation of banking and non-banking activities,” the report stated.

The Goldfields Money-Finsure merger is expected to be complete by 14 September, following shareholder approval on 7 September.

Bank to raise $20m as it prepares to merge with aggregator
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Tas Bindi

Tas Bindi

AUTHOR

Tas Bindi is the features editor for The Adviser magazine. 

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