Latitude snaps up Symple for $200m to beef up lending

Latitude has bought personal lending platform Symple for $200m as it seeks to expand its business locally and offshore.

Latitude Group, led by chief executive Ahmed Fahour, has bought Symple for $200m. Picture : Ian Currie/NCA NewsWire

Latitude Group is aiming to accelerate growth in its consumer loan portfolio and slash costs after paying $200m in cash and shares for the Melbourne-based personal lending fintech Symple.

In a deal which echoes National Australia Bank’s $220m acquisition of neobank 86 400 earlier this year, Latitude chief executive Ahmed Fahour said Symple would become the lending platform for all the company’s personal and auto loans – a $2.5bn loan book and 160,000 customers.

Latitude would also expand its auto loans business into New Zealand and personal loans into Canada through Symple’s established North American business.

“This is an exciting and important opportunity for Latitude that will accelerate our growth plans,” Mr Fahour said.

“Symple’s scalable platform will enable Latitude to offer a wider range of products and product features in Australia and NZ, enter new geographies and significantly reduce costs while delivering superior customer and partner experiences.”

Symple was founded in 2018 by Bob Belan and Paul Byrne, who previously led the consumer finance businesses at ANZ Bank and have extensive retail banking experience in Australia, Asia and North America.

Over the last two years, the company has generated $53 million in loan receivables in Australia and will start writing personal loans in Canada next month.

Anticipated synergies from the acquisition, funded by the issue of 38.5m Latitude shares at $2.60 a share and $100m in cash, will kick in from the second half of the 2022 financial year and grow to $32m before tax in 2023.

Synergies include $8m in operating income from volume growth through new products and segments, as well as improved conversion of applications to loans, and $24m in savings from reduced labour costs and decommissioning of systems.

Mr Belan and Mr Byrne will receive 23.5 million of the shares to be issued, which will be escrowed for two years.

The main attraction of Symple is its proven and scalable lending platform – the same strategic rationale for NAB’s purchase of 86 400.

Latitude’s $2.5bn book of personal and auto loans, as well as 160,000 customers, will be transferred to the Symple platform, enabling the retirement of legacy technology platforms.

In addition to expansion opportunities in NZ and Canada, Mr Fahour flagged a targeted assault on the $11bn personal loan market in Australia.

While Latitude is the number two provider with a 26 per cent share of the $5bn fixed-rate market, up from number three in 2017, it does not compete in the $6bn variable-rate market.

Mr Fahour said the company’s ambition was to build the same market share in the variable-rate market in the next five years.

“The growth opportunity is enormous, and the real excitement is in the platform and Symple management team,” he said.

“Legacy organisations have worked out that it’s impossible to build their own systems at scale.

“We would have had to pay $100m to build our own platform over 2-3 years.”

Mr Fahour said the deal would enhance Latitude’s existing strengths, including its 2.8m customers in Australia and NZ, and improve its data and risk capabilities and funding capacity.

The addition of Symple’s Mr Belan and Mr Byrne would further strengthen the management team.

Latitude forecast in a statement that the acquisition would lift cash net profit by 9 per cent in the 2023 financial year, with in-year cash earnings per share to expaLatitude Group is aiming to accelerate growth in its consumer loan portfolio and slash costs after paying $200m in cash and shares for the Melbourne-based personal lending fintech Symple.nd by 5 per cent.