REA snaps up Athena stake for $62m in local play, amid British takeover move

Taking a stake in the fast-growing local fintech signals REA’s intent to push into new areas. Can it do the same with takeover target Rightmove?

Digital property advertising company REA Group is stepping up its presence in financial services in Australia by striking a deal to acquire a 19.9 per cent interest in non-bank lender Athena Home Loans.

The $62m deal underscores REA’s intent to push into property-related sectors where it can offer services to home buyers coming through its realestate.com.au portal, as part of its strategy to shift into adjacent areas.

That ability is a key part of its takeover pitch for British property portal Rightmove, via a near-$12bn bid, which, if combined with REA would likely push into such areas.

However, the British group rejected REA’s twice-sweetened takeover proposal on Wednesday, taking a hard line against the plan, which it described as “unattractive” and said materially undervalued its operation.

The target taken a tough stance despite calls from key investors to open talks on the takeover proposal. Two shareholders, GCQ Funds Management and Fairlight Asset Management, have urged Rightmove to engage with the bid.

News Corporation, publisher of The Australian, has a majority stake in REA, but would be diluted under the scheme to create a larger global company.

REA shares rallied 3.1 per cent to $198.31 on Thursday, outpacing an almost 1 per cent gain in the S&P/ASX200.

As part of the local transaction with Athena, REA will also take two seats on the lender’s board with a view to building on their existing relationship.

REA and Athena first formed a strategic tie-up in 2022, bringing together Athena’s home loan products with the distribution network of REA’s financial services brand, Mortgage Choice.

REA last year also launched the Mortgage Choice Freedom white-label products, developed in collaboration with Athena, which delivered $1.2bn in settlements last financial year.

Still, Thursday’s transaction comes amid a challenging environment for home lending growth, given the Reserve Bank has kept the cash rate higher for longer to tame inflation.

Athena - which has a loan book of $4bn - has been supported as a start-up by investors such as Square Peg Capital, AirTree Ventures, Macquarie Group and industry superannuation funds AustralianSuper and Hostplus. A small portion of the $62m Athena transaction price - for the stake sold to REA - reflects a sell down by some staff and minority investors.

REA chief executive Owen Wilson said the company continued to invest in new technology to accelerate its strategy and deliver greater value to consumers, customers, Mortgage Choice brokers and shareholders.

“REA’s proposed investment in Athena will further enhance our existing partnership and reinforces our commitment to providing Australian homebuyers with greater choice and a seamless consumer experience when finding and financing property,” Mr Wilson said.

Athena co-founder Michael Starkey said the lender looked forward to its next phase of growth and was confident it would become profitable around mid-2025.

“A lot of this (sale of a stake and partnership with REA) is about cultural fit,” he added.

Mr Wilson said that growing the company’s national broker network and evolving its digital mortgage offering for the 12 million Australians who visit realestate.com.au was an important part of the company’s financial services strategy.

“An equity investment builds on the success of our innovative Mortgage Choice Freedom home loan products and forms a strong alliance to support the delivery of our strategy, while also benefiting from Athena’s growing loan portfolio,” he said.

Athena chief executive and co-founder Nathan Walsh said the company was committed to providing Australians with alternative lending solutions that are transparent.

“REA joins a strong list of Athena investors, and we are proud to be working with this industry leader to continue our mission of changing home loans for good for all Australians,” he said.

The proposed investment is subject to certain conditions, including regulatory approval, and is expected to be completed in one to two months.

The announcement coincided with Athena pricing its second 2024 residential mortgage backed security issuance - through its Olympus program, raising an additional $1bn in debt funding.

Athena also has a partnership with Sam White-led mortgage broking aggregator LMG. The lender has this year started pushing into higher margin parts of the home loan market, after rising interest rates prompted a slowdown in broader housing credit over the past 18 months.

Athena Home Loans is pushing into higher margin parts of the home loan market, after rising interest rates prompted a slowdown in broader housing credit over the past 18 months.

Athena has began offering a mortgage for those that have a deposit of less than 20 per cent of the loan’s value, but can still provide a deposit of at least 15 per cent.

Originally published as REA snaps up Athena stake for $62m in local play, amid British takeover move