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YBR to diversify offering as it aims to fill market ‘gap’

by Charbel Kadib5 minute read
Mark Bouris

The group’s executive chairman, Mark Bouris, has outlined plans to broaden Yellow Brick Road’s loan offering, after “working hard under the bonnet” to improve its platform.

In an address to shareholders, Mr Bouris noted Yellow Brick Road’s plans to “meet emerging areas of demand” in the lending market by diversifying its product offering.

Mr Bouris said that YBR aims to venture into the commercial lending space, equipment finance and small business lending.

The YBR head also made reference to the group’s mortgage securitisation program, which Mr Bouris previously said would be a “key value-enhancing component in YBR’s overall mortgage strategy”.

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YBR is currently in negotiations with an unnamed major bank to secure a $300 million mortgage warehouse facility in an attempt to expand its presence in the residential lending space.

Mr Bouris told shareholders that the securitisation program would help fund products that the major banks are “pulling away from”.

“We believe market timing is now ripe to establish our own securitisation program, especially as the banking royal commission and regulation are causing the major banks to pull away from certain categories of lending products,” the executive chairman said.

“Securitisation will allow YBR to fill the gap by distributing our own products. It will give us greater ownership of the mortgage value chain and allow us to share in the funding margins.”

Further, Mr Bouris said that YBR had been “rebuilding” the business in the 2018 financial year (FY18), in which the group reported a net loss after tax of $700,000.

“The past year has been very much about creating a solid and sustainable platform for accelerating success through a carefully managed program of network optimisation, product and platform innovations, and the creation of continuing development pathways for all staff,” Mr Bouris continued.

“We have been working hard ‘under the bonnet’ to improve the engine.”

He added: “We have a clear vision, backed by a calculated yet logical strategy, and a team of highly capable industry experts leading the way.

“With a strong brand presence across Australia, a value proposition that puts the customer first and a significant distribution network, we are well positioned to take advantage of emerging market opportunities.”

Mr Bouris’ comments follow the expiry of a takeover bid from investment firm Mercantile OFM (a wholly owned subsidiary of Mercantile Investment Company).

Mercantile sought to acquire YBR shares by offering shareholders a cash price that represents a 3.2 per cent discount to $0.094.

YBR’s directors unanimously rejected the takeover bid, claiming that the offer was “grossly inadequate”, adding that Mercantile’s “inadequate and opportunistic takeover bid would deprive YBR shareholders of the full strategic value of their investment”.

[Related: YBR takeover offer to expire today]

markbouris

Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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