Yellow Brick Road chairman Mark Bouris has announced a restructure of his business, with a new non-bank holding company poised for three major possible acquisitions in the coming months.
Shares were up more than 12 per cent today after the Wizard Home Loans founder revealed advanced negotiations were under way with an established mortgage aggregator, a mortgage manager and third “lead generating” business. Confidentiality and exclusivity agreements have been signed.
Bouris told Business Insider the aggregation business already had an established presence. “They have good volume, and a broad and diverse coverage in terms of the brokers who feed into their pathway,” he said in an interview.
“They have been around a long time, and have really good people. It would give us buying power, and it also gives us access — as an owner — to a different type of model to Yellow Brick Road.”
The mortgage manager is also “a good business that’s been around for a long time” he said. The third potential target would generate leads for the diverse financial services company, which aims to turn a profit in 2015.
“Their primary business would generates leads for the other entities: Yellow Brick Road, wealth, the aggregator and the mortgage manager. You need leads for those organisations,” he said.
“The head-stock will own, as of today, the Yellow Brick Road model — the wealth management model — it will own the aggregator, it will own the mortgage manager model and it will own a lead generator.”
“That non-bank group in itself will have big volumes, which gives you better buying power, and better reach. And using the Channel Nine platform we hope to build all four brands.
“Using the Macquarie manufacturing ability we hope to push products through all four of those brands,” he said.
The announcement of the new holding company is the latest in a series of steps that has seen Yellow Brick Road challenging Australia’s banks in areas they once held a stranglehold over.
The company teamed up with Macquarie in 2012, with the investment bank using Bouris’ vast network of branches to carve itself a bigger slice of Australia’s $1.3 trillion mortgage market. As well as providing white-label products, Macquarie has also taken a significant stake in Yellow Brick Road.
“I am hoping all this will enhance our relationship with Macquarie, and actually build the relationship even deeper,” Bouris said. “I would like to sit down with them and talk about the plans. I’m hoping they will come on the journey with us.”
“They have some very good products and they just want to get them out to clients, and what we’re hoping to provide is that access. I guess that’s probably why they invested in us in the first place.”
Bouris said a brand recognition survey recently showed one-in-three Australians were aware of Yellow Brick Road. Marketing has been essential to the low-cost, nimble company in its fight with much bigger, cashed-up competitors.
Nine Entertainment took a significant stake in the business in 2011, as part of a strategy of using its media assets to build fledgling companies. Half of the investment was in cash, with the other portion paid in advertisements. Many viewers are familiar with Bouris’ appearances on the network’s Celebrity Apprentice program.
“They know how to build brands — we have great recognition. It’s nothing to do with me, it’s all coming out of the Nine stable.
“We’ve done all this before with Nine and the Wizard business — both Nine and us know how to do it. We still have the same relationships with the same people at Nine. We have the same people here at Yellow Brick Road that we had at Wizard.
“They are using their very powerful platforms and engines to own equity value increases, and at the same time they get revenue from us in advertising spend.”