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Former Humm chair expands stake in company

by Sam Nichols5 minute read

The lender’s founder and former chair has increased his stake, less than one month after he flagged his opposition to a deal with Latitude.

This initial shift in shares Change of Director’s Interest Notice was released by hummgroup (Humm) on 8 June, with the lender confirming that Andrew Abercrombie had purchased 6,385,816 shares of the company through his outfits Tefig and The Abercrombie Group for more than $5.1 million.  

On 10 June, the lender also confirmed that Mr Abercombie had purchased an additional 1,715,450 shares, through The Abercrombie Group, for a total of $1.3 million. 

The move comes less than one month after the former chair announced that he would vote against the sale of Humm’s buy now, pay later (BNPL) and credit card business, Humm Consumer Finance (HCF), to Latitude.

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This sale was first flagged in February, with both Humm and the non-bank lender confirming they had entered an agreement for the sale

The consideration for Humm comprises 150 million Latitude shares and $35 million cash. When announced in February, this would have made the total consideration $335 million (when shares were $2.00 each), however this now equates to around $272.7 million (as the share prices was $1.585 at the time of writing)*.

Mr Abercrombie has contested the notion that Latitude’s offer is fair, stating in May that the non-bank’s offer has undervalued HCF. 

He also said at the time that a better approach would be for Humm to remain listed in its current form and to act out its previous plan for organic growth, this being to become an opportunistic consolidator in the sector.

However, as reported last month, the majority of Humm’s directors have recommended that shareholders approve the sale, arguing that the price is attractive and that the BNPL landscape is rapidly changing. 

“Consequently, HCF is no longer competing only with standalone BNPL providers but with larger, diversified global payments companies,” the booklet for shareholders stated.

“As a result of these changes in the consumer finance sector, the macro environment, market dynamics, and the cost and execution risks of the strategic initiatives viewed as necessary to support HCF, the majority directors believe the overall proposal will create materially more value for Humm shareholders than the status quo.”

The board also expressed that they believed the sale would provide capital to fund the growth of its business lending arm, flexicommercial.

Earlier this year, Humm announced that it intended to solely focus on its business lending division, which is focused on the broker channel.

The board also said that it predicts momentum will continue for consumer finance, after the segment’s cash net profit after tax (CNPAT) came to $46.1 million for the 2021 financial year.

This had rebounded after falling to $26.7 million over FY20, from $63.7 million the year before. 

So far in FY22, the company has generated $12.5 million for the first half.

Since December, Humm’s shares have fallen by almost 21 per cent. 

*This story was updated on 14 June to reflect the up-to-date share price and subsequent change to the valuation of the deal.

[Related: Former Humm chair protests Latitude sale]

andrew abercrombie ta

Sam Nichols

Sam Nichols

AUTHOR

Sam Nichols is a journalist at The Adviser and Mortgage Business. His reporting has featured in a range of outlets including ABC News, SBS' The Feed, and VICE.

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