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YBR sells investment service as it focuses on mortgages

mark bouris ybr mark bouris ybr
Annie Kane 7 minute read

Yellow Brick Road has sold its stake in wealth investment service Smarter Money Investments as it continues its “strategic pivot” away from wealth management.

According to an update to the ASX, Yellow Brick Road Holdings (YBR) has entered into a conditional contract to sell its 50 per cent equity interest in Smarter Money Investments (SMI) to “one of the shareholders” in Coolabah Capital Investments (CCI), which owns the other half of SMI.

CCI is the sub-investment manager for SMI’s funds.

According to YBR, CCI is currently responsible for approximately $3 billion in funds under management, including $1 billion of SMI funds. 


The sale will see CCI own the SMI service in full and ”absorb” all of the staff that worked in the distribution and administration side of the SMI joint venture.

YBR told the market that it expects the $7.5 million sale to complete on Friday (12 July), with $5 million paid in cash on completion (with the remaining paid over a period of 18 months after completion).

However, YBR noted that its franchised branches and its Vow broker network will continue to offer SMI’s and CCI’s existing and future cash and fixed interest products.

The move forms part of YBR’s ongoing strategy to create a “much simpler business” by disposing of its head office wealth business functions and focusing on mortgages.

YBR executive chairman Mark Bouris commented: “We were very pleased to have been a 50 per cent founding shareholder of the SMI business along with its other co-founders who, with YBR, have built from a start-up in 2011 a significant $1 billion plus, market-leading funds management business in their area of expertise in fixed interest. 


“However, given YBR’s recent strategic pivot away from wealth management to focus on the mortgage market, it made sense that we exited from this business in a controlled and profitable manner.”

Commenting on the sale, CCI director and co-founder Darren Harvey said: “The SMI joint venture has been a tremendous success, and Coolabah and its shareholders are delighted to take full control of the business, which made sense given our strong growth in the retail and institutional markets. 

“The existing investment team comprising four portfolio managers, eight analysts and a range of operations, compliance and finance professionals will be expanded to include the four SMI product specialists who have worked very closely with the CCI team over the last eight years,” he said. 

YBR mortgage strategy

In May, YBR announced that in order to “concentrate its efforts” as a mortgage distribution, servicing and manufacturing group and “reduce significantly the cost-to-income ratio of the business”, it was looking to “dispose of, outsource or otherwise restructure the head office wealth business functions”.

While YBR franchisees will still be able to distribute wealth products and give wealth advice to their existing and future clients, it is intended that this would be done under a separate Australian Financial Services Licence with one or more third parties.

“The restructure of the wealth business is expected to significantly reduce our cost base, allowing us to run a leaner and more cost-effective organisation,” the group said in May.

By offloading the wealth business, YBR is looking to renew ts focus on mortgages, both through distribution, servicing and securitisation, as its mortgage businesses “offer significant leverage to the market”.

YBR would therefore retain its franchise network, which has an underlying mortgage book of approximately $7.6 billion and currently consists of 115 branches and more than 140 accredited business writers. 

It will also retain Vow Financial aggregation, which reportedly has a network of 505 broker firms with more than 1,000 accredited brokers and around $785 million in mortgage settlements per month.

The restructured YBR Group will also retain its mortgage servicing arm, via the manufacture and servicing of mortgage originations through its existing Resi Mortgage Corp business.

[Related: YBR overhauls company, CEO to step down]

YBR sells investment service as it focuses on mortgages
mark bouris ybr
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mark bouris ybr
Annie Kane

Annie Kane

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. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.



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