Heartland Group Holdings, under which its Australian reverse mortgage business operates, has begun trading on the Australian Securities Exchange.
Heartland Group commenced trading on the Australian Securities Exchange (ASX) on Thursday (1 November) under a foreign exempt listing, with a per-share offering price of $1.65.
The listing follows the completion of a restructure through which Heartland Group became the parent company of New Zealand-registered bank Heartland Bank and Australian reverse mortgage provider Heartland Seniors Finance (HSF).
The restructure saw the group’s Australian reverse mortgage business, which was acquired in 2014, freed from the capital requirements of the Reserve Bank of New Zealand (RBNZ), where it was previously operating under.
Heartland CFO David Mackrell previously said that the RBNZ “constraints” would hamper the growth of HSF, which has grown faster than the other divisions of the group in the 2017–18 financial year, and that it made more business sense to restructure than find alternative sources of funding, as it prefers secured funding.
“The restructure and the ASX listing are significant milestones for the group and provide a more suitable platform for future growth. The restructure will provide greater flexibility to explore and take advantage of future growth opportunities in New Zealand and Australia outside the banking group,” Heartland stated in a disclosure to the ASX.
HSF’s reverse mortgage market share has been increasing, standing at about 20 per cent as of 30 June 2018, and is expected to continue to grow as there are around 20,000 Australians turning 65 every month.
The lender’s portfolio of reverse mortgages in Australia grew by NZ$159.3 million (AU$144.5 million), or 31 per cent, to NZ$676.8 million (AU$613.8 million) in the 12 months to the end of June 2018.
Banks such as Commonwealth Bank and its subsidiary Bankwest, Macquarie Bank and Westpac have all exited the reverse mortgage market in the last couple of years. The managing director of the Finance Brokers Association of Australia (FBAA), Peter White, speculated that “the banks put reverse mortgages in the ‘too hard’ basket” following multiple, often concurrent, inquiries into their lending practices, including their dealings with senior Australians.
“They have become almost scary for some because of the well-publicised failures, but often those failures are because banks have been negligent in their assessment of the needs of older Australians,” the FBAA managing director said.
Mr White urged brokers to see the exit of many lenders from the reverse mortgage market as an opportunity.
HSF chief executive Andrew Ford last month said that the majority of its business, around 70 per cent, comes from the broker channel.
“Approximately 70 per cent of our business comes from brokers and we’ve worked really hard to expand that distribution… There are obviously demographic factors at play, [such as the] ageing population and a growth in need for reverse mortgages, but we’ve increased our distribution through the broker channel and are also attracting customers directly through online activities,” Mr Ford said in October.