A major aggregator has entered into a binding agreement to make a strategic investment of 30.4 per cent (fully diluted) in a commercial property lender for $10.9 million in cash consideration.
Australian Finance Group Limited (AFG) has announced that it has acquired a strategic interest in Think Tank Group Pty Ltd.
As part of the strategic investment, it will distribute a white label commercial property product through its network of brokers.
The deal, which is expected to be completed later today, 19 April (following the transfer and confirmed receipt of consideration), will give AFG the right to appoint two directors to the Thinktank board and they will take up those positions immediately.
Speaking of the move, AFG chief executive officer David Bailey said: “Our strategic investment in Thinktank represents the next evolutionary step for AFG to diversify its earnings base.
“The ongoing success of AFG Home Loans and the introduction of AFG Business are important contributors to the future growth of AFG.
“It makes sense to participate further in an asset class that we are comfortable with — both directly through the white label opportunity and indirectly through our shareholding to generate further earnings for AFG.”
Mr Bailey added that the opportunity to “blend” Thinktank’s commercial property lending expertise with AFG’s distribution and securitisation capability would “benefit both businesses”.
“It will also enable us to deliver further competition and choice to the small to medium enterprise (SME) marketplace at a time when it is most needed.
“AFG aims to bring the same disciplines to this white label proposition as we have successfully demonstrated with our own residential white label program.”
Thinktank, which operates primarily as a commercial property lender for loans of under $3 million, was established in 2005 and has a loan book in excess of $750 million.
It is expected to achieve profit after tax in FY18 of approximately $3.2 million.
Its CEO, Jonathan Street, commented: “The agreement reached with AFG marks a further significant step forward for our business and serves to further enhance our capacity to best service the finance needs of borrowers over the breadth of the Australian commercial property market.
“In coming together, we see considerable opportunity to not only combine our efforts to great effect across the AFG network but equally in extending the same emerging advantages and benefits to our wider base of aggregation and broker relationships.”
[Related: AFG banking on new commercial platform]
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