Recludo Group, the boutique private equity firm specialising in the mortgage broking industry, has taken a controlling stake in Pink Finance and is preparing for a future initial public offering.
Recludo, a company launched by industry veterans Tim Brown (CEO), Ash Playsted (general manager, broker performance), Tom Roche (chief operating officer), and Jon Corney (chief financial officer) that invests in top brokerages and specialises in strategic succession planning, has taken a 51 per cent stake in Sydney-based brokerage Pink Finance, run by Nicole Cannon.
Launched in mid-2024, the group has built a $3.2 billion residential loan book through a combination of acquisitions and partnerships with established brokerages.
The acquisition is one of eight companies acquired so far by Recludo, which has already taken controlling stakes in Phillips Basile Ivory (PBI) Mortgages, Vision Finance Australia, Australian Finance 360, AM Broker, Astar Finance, Thry Group and another brokerage (not yet disclosed).
The company works by investing in broking businesses and providing resources and consulting services to the owners/teams to “rapidly increase revenue, profit, and value growth”.
It recently acquired Pink Finance, headed up by AFG broker Cannon, and helped her scale her brokerage.
According to Cannon, when she joined Recludo, her loan book sat around $185 million, but has since grown to over $300 million (through both acquisition and organic growth) and is now targeting the $500 million milestone.
Speaking to The Adviser about the move, Cannon explained that the decision to partner with Recludo was driven by a desire to “unlock the potential” of her business, while maintaining her brand’s unique identity and reducing key person risk.
The 24-year industry veteran explained: “After 22 years of doing things on my own and growing Pink Finance, I knew exactly what I wanted my brokerage to be. We do so much community engagement with the McGrath Foundation and our community and ethics representation, and that was a non-negotiable for me. I did not want to lose the qualities of what made Pink Finance a trailblazer in the business. But I knew Pink Finance had the potential to be even bigger and better than what it is, and I thought that this would be a great way to be able to reach that potential.
“You don’t know what you don’t know – so I was hugely interested that Recludo could help get some capital back into the business, which gave me the opportunity to then be able to buy trail books, all while they’ve provided support in different areas of parts of the business.”
According to Cannon, a core attractor was having specialists with M&A experience, as well as experience in growing and scaling brokerages, to support her business vision.
She reflected that Recludo had supported her in writing job descriptions and working with a recruiting company to find the right staff, setting 90‑day incentive plans for staff, and stepped in to help run the brokerage while she was on holiday.
Cannon said: “We’ve got to keep changing and evolving within the industry, and this seemed to be something that was different.”
Recludo CEO Brown explained that the group targets businesses that have been operating for a decade or more but have reached a capacity ceiling.
“Generally, we have been looking for businesses that have been in business for 10 years or more, and probably grown a reasonable-sized portfolio. In Nicole’s case, she had a book of $180 million, but we knew that with a couple of acquisitions, we could get that up above $300 very quickly, which is what we did,” he told The Adviser.
He emphasised that Recludo’s value-add goes beyond capital, focusing on due diligence for mergers and acquisitions that individual brokers often lack the time or expertise to execute.
“Most brokers wouldn’t have ever dealt with a merger or an acquisition in the past... so they might miss things or potentially make a few mistakes that could be costly,” Brown said.
“So, that’s one of the things that we bring to the table,” he added and emphasised that the intent of the acquisition is partnership, not interference, and that brokers who Recludo invests in continue to aggregate through the aggregator of their choice.
“We want to control an interest for two reasons: one, to protect our investors. And two, at the point in time when we do want to go to the IPO, we don’t want to have to be asking for permission.”
While a specific date for the IPO remains subject to market conditions, Brown indicated that Recludo is building toward a portfolio of approximately 50 high-performing brokerages.
“We’re not telling them how to run their business. We’re advising them, and we’re helping them wherever we can. So they’re still in control of the operations instead and they operate within a budget... but we can help them scale and improve their productivity,” Brown said.
The Hawley brothers join the fold
The company has also attracted high-profile industry backing, with Tom and Ben Hawley of Top 25 Brokerage Azura Financial recently becoming shareholders in Recludo.
Tom Hawley told The Adviser that the decision to invest personally was a validation of the “roll-up” model, which he believes is ripe for the Australian mortgage market.
“We like the investment proposal of buying a lot of brokerages. I think there’s a lot of upside, and we’ve got a lot of IP in our business, so we can share that with other brokers,” he said.
He added that the “one-man band” model is becoming increasingly difficult to maintain in a complex regulatory environment.
“It’s so hard to operate as a single broker who is a one-man band these days. And I think many brokers want to be consulting on how to grow,” he said.
Recludo is expected to settle its seventh acquisition, a Melbourne-based firm, in the coming weeks.
[Related: Recludo completes acquisition of 3 brokerages]
