Liberty has eyes for Connective

Mortgage aggregator Connective, which is backed by Macquarie Group, is said to be on the radar of non-bank lender Liberty Financial and buyout firms including Crescent Capital.

Several private equity firms are understood to have run the numbers and at least three parties are in and around the Connective sale process, which could garner a price of $80 million-$100m. First-round bids have been lodged.

Mortgage aggregators provide support and compliance services to mortgage brokers and in the local market includes AFG, Vow and National Australia Bank-owned FAST.

It is an interesting time to be conducting a strategic review and a potential sale of Connective, which was founded in 2003.

While the Liberal Party has backed down from scrapping broker commissions, Labor has said it will stick to its plan to end trail payments that are paid over the life of a loan.

That follows the Hayne royal commission calling for a wholesale shift away from commission payments in broking to a flat-fee model.

Whichever way you look at it, any sort of uncertainty doesn’t help a vendor, particularly if it relates to regulation. Connective’s website says the company has a loan book of $135 billion and a network of 4094 members.

Adviser 333 Capital is working with Connective and its owners on strategic options.

For Liberty — which is alert to acquisition opportunities and last year purchased fintech lender MoneyPlace and aggregator National Mortgage Brokers — the transaction makes some sense. Liberty’s sales manager for Victoria and Tasmania, Sof Tsialtas, is also a former Connective stalwart and knows the business well.

Sources close to the process say Macquarie had quietly assessed buyer interest for its minority stake several months ago, without starting an auction.

In recent months Macquarie exited providing loans to Connective and others — which could be white-labelled or branded under their own name.

And a divestment by Macquarie in Connective would align with a broader pullback from the aggregator space.

Macquarie exited its stake in Mark Bouris’s Yellow Brick Road last year after selling its holding in AFG in 2016. It has retained a holding in online broker Lendi.