Mark Bouris’ Yellow Brick Road to quit ASX as it positions for mortgage market rebound

Mark Bouris says the decision to delist the home loans group from the ASX will allow him to focus on what he is good at and to take advantage of a mortgage market rebound.

Yellow Brick Road founder and executive chairman Mark Bouris has vowed to get the home loans business back to what “he is good at” and to restore shareholder value after confirming plans to quit the Australian Securities Exchange after 15 years.

The decision by the company to delist from the ASX and go private would leave it best placed to take advantage of a rebound in the mortgage market next year, Mr Bouris told The Australian.

The business, founded by Mr Bouris in 2007 after the sale of his Wizard Home Loans business for $500m to GE Money, said that delisting was in the best interests of shareholders because the current share price did not reflect its true value and poor liquidity.

Delisting had been in motion since the start of 2023 and will be put to a shareholder vote on or around October 24. Shares in Yellow Brick Road have plunged 95 per cent from $1.105 when it listed in January 2008 to the most recent price of 5.1c, giving it a market value of $16.4m.

Mr Bouris said that being listed no longer made sense, with the current share price having been materially lower than the underlying value of its net tangible assets.

“Going private feels like the best outcome of me and today none of our largest shareholders feel that being listed is the right move,” he said.

“Listing makes sense if you want to raise money, but we don’t need to raise money as we have lots of money in the bank and are in a good shape with plenty of business.”

The decision to exit the ASX will save $350,000 each year, Mr Bouris said. He said lots of rules and regulations that listed companies have to follow took up was also taking up lots of time that could be better used at growing the business.

“I’m not upset about following the rules, but it does take up a lot of time,” he said.

“Our business is distribution and mortgage and that is what I am good at. I want to concentrate on that and not on issues that arise outside of that.”

“I want to help get as many people as possible to get a home loan to allow them to buy a house — that’s what I enjoy the most.”

Yellow Brick Road has a heavily concentrated share registry with the four largest shareholders holding 62 per cent of its issued capital and as a result was hurting liquidity. Fund manager One Investment Group controls 19 per cent, followed by Pink Platypus – a Nine Entertainment investment vehicle which owns a 15 per cent stake.

Golden Wealth Holdings, an entity controlled by Mr Bouris, has a 15 per cent stake, while Mr Bouris and associates hold various other smaller direct shareholdings.

Yellow Brick Road reported earnings before tax, depreciation and amortisation halved to $1.2m in the 2023 financial year, as fierce competition from banks, lower demand for loans on the back of increasing interest rates, and a high rate of borrowers refinancing their loans, hurt the company’s bottom line.

Mr Bouris, who rose to fame as the host of The Apprentice, expected the mortgage market will turn the corner by the middle of the next year.

“There will be some good opportunities that will rise as a result of the market changing,” he said. “Right now we are positioning ourselves by delisting to take advantage of that.”

“I want to turn this into a better outcome for everyone to build the brand and distribution and sell more home loans. I want to get the company back up and get a proper valuation that reflects the true worth of the business.”

Mr Bouris has been under pressure to turn around his underperforming company for years, with it selling its wealth management unit to Sequoia Financial Group in 2019 to focus on home loans.

Yellow Brick Road had been impacted low trading volumes and liquidity in shares, which limited shareholders’ opportunities to exit their positions and for new investors to gain stock. The company said that shares were exchanged on just six of the 23 trading days in August and 15 of 21 days in July.

“The sharemarket works really well when there is lots of liquidity and overtime that has been choked by the current shareholders who like the stock and don’t want to sell,” Mr Bouris said.

“It also doesn’t help the smaller shareholders who not getting the true value of the business.”

Mr Bouris added that the deflated share price and poor liquidity also made it hard to attract new investments while listed on the sharemarket.

“If someone wanted to buy a 20 per cent stake, they couldn’t just buy it at its current worth as the share price would soar by so much. No one is encouraged to buy as a result of that, as they’d have to pay a lot more.”

Yellow Brick Road is the second company to move to delist in recent weeks, after Raphael Geminder seeking to take plastic bottle and vitamin container-maker Pact Group private.

Its shareholders will see their holdings converted to the certificated sub-register on the company’s register after Yellow Brick Road delists. Investors would then only be able to sell their stakes via off-market private transactions.

The company was offering a share purchase plan for investors to acquire up to $30,000 in new shares to top up their stakes. It will also undertake a minimum holding share buyback of ordinary shares for portfolios valued at less than $500.