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Vow Financial looks at mergers
Jeff Zulman
After months of speculation, the new aggregation group backed by Macquarie Bank Limited has finally made its debut. While the current consortium is made up of The Brokerage, National Brokers Group and The Mortgage Professionals, chief executive officer Jeff Zulman has confirmed more merger activity could be on the horizon. “Discussions are still ongoing. The group that has come together is the same group from the time that I started. But there have been those that had an interest but didn’t want to be the first movers… Now we need to bear down and integrate, but our discussions are ongoing with some of those other groups and we’ll see where they take us,” he said. Brokernews broke the story last year in March about the
formation of the MacBankbacked aggregator. Initial reports indicated six aggregators were looking at joining the organisation – three from Sydney and one from South Australia, Western Australia and Queensland respectively. Vow Financial currently represents more than 900 brokers nationally and has a combined $16bn of loans under management, making it one of Australia’s big five in the mortgage game. According to Zulman, size does matter. “People like to say size doesn’t matter, but it gives you scale.” For example, fixed costs such as the creation of bespoken IT systems or compliance departments are cheaper when borne by a larger number of brokers, Zulman said. However, he added that Vow Financial was looking to add quality brokers, not just quantity. Zulman also said that once the merger has been finalised, Vow would be looking at diversification. “Initially, we are looking to increase value through internal growth and acquisition of other mortgage loan aggregators. Longer term, our ambition is to diversify the business into the broader financial services sector and offer non-mortgage products.” Macquarie Bank holds a minority interest of less than 20% in
the group, while Zulman and non-executive chairman Dr Peter Neustadt hold the rest of the shares. According to Zulman, Macquarie’s involvement has been crucial to setting up the new aggregator, but its control over the organisation will be limited. “I think having somebody neutral helped everyone to park their egos at the door. “Now that’s over they’ve stepped into the background. They have a minority stake, they have one director on the board, and they have no pre-emptive or special rights.” Macquarie has recently made a foray back into the broker market. In late December, it quietly released a new bundled mortgage product through AFG and Vow Financial brokers. A spokesperson for the bank said that it is still testing the waters and is not ready to release the product to the wider broker market just yet.
Key points Discussions ongoing with other groups CEO says size does matter Looking to add quality brokers, not quantity Long-term plan to diversify into other financial services areas
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