Consortium acquires majority stake in Oxygen

McGrath has entered into a transaction that will provide a consortium of financial services and technology investors with a Majority stake of 55% in the Oxygen Home Loans business.

McGrath Real Estate Group Ltd has announced that it has entered into an agreement to provide a new consortium of financial services and technology investors, Oxygen Investment Corp Pty Ltd, with a majority stake of 55% in its brokerage business, Oxygen Home Loans (Oxygen).

Oxygen Investment Corp is led by equity specialist and former CEO of consumer credit and vehicle company Eclipx, Doc Klotz; peer-to-peer lender Harmoney’s Australian chief operating officer, Ben Taylor; and the Sturt Capital Partners asset financing and investment business. Mr. Klotz and Mr. Taylor both worked together at financial services firm Flexigroup for several years, where they served as Head of Global Operations and Head of Innovation and Products, respectively.

As a result of the transaction, Oxygen will receive a capital injection of $ 2.5 million in cash, which would be used to “offer an improved scale and optimization of its Oxygen mortgage business ”.

McGrath, who reduced his stake in his 18-year-old mortgage brokerage business to 45%, will also receive a cash payment of $ 1.8 million in three years as part of the deal.

The real estate company will retain its sponsorship agreement with Oxygen and retain three of the seats on Oxygen’s board of directors.

It is not expected that there will be an immediate change in the activities of the brokerage firm, which currently operates with 26 brokers and has a loan portfolio of approximately $ 3.2 billion (as of December 31, 2020).

Instead, the deal is expected to “expand” the Oxygen home lending business.

According to McGrath, the new funding will be used to increase resources, accelerate digitization and add complementary fintech products to create a broader product offering for Oxygen.

In an ASX update, the group said the transaction would help “lEverage Oxygen’s digital expertise to unleash value ”for McGrath, providing a “compelling opportunity to enhance McGrath’s existing mortgage brokerage business to complement its real estate sales and management business” and enable it to “access a wider range of financial products for McGrath customers ”.

McGrath CEO Eddie Law said: “We are delighted to partner with the consortium to unlock the significant potential that the merged company will offer on our platform. As a result of the investment, Oxygen will be able to provide its mortgage brokers with an improved client-centric proposition, a streamlined process and an improved service proposition that will allow them to take on more loans and make it easier for our mortgage brokers. sales agents to facilitate the delivery of mortgages. to our buyers.

“There is no doubt that technology will play a key role in the future of mortgage brokerage and real estate sales, and this transaction, along with the direct investment we are making in technology, sets McGrath up for continued growth,” did he declare.

“Importantly, a more streamlined loan underwriting process will allow our sales agents to facilitate the delivery of mortgages to buyers,” he concluded.

The move is one of the first major structural changes made by the new CEO since taking office as CEO in August 2020.

Mr Law, who became CEO of McGrath after Geoff Lucas resigned in August last year, has held various positions in financial services, including as gGlobal Head of Institutional Real Estate at ANZ.

He also has experience in structured commercial real estate debt financing, having recently served as Executive Director of Newground Capital Partners and Chief Investment Officer of MaxCap Group.

[Related: Major brokerage appoints new CEO]

The consortium acquires a majority stake in Oxygen

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Updated: April 7, 2021

Published: April 7, 2021

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Annie kane

Annie kane

Annie Kane is editor-in-chief of The Adviser and Mortgage Business.

In addition to writing about the Australian brokerage industry, mortgage market, financial regulation, fintechs and the broader credit landscape – Annie is also the host of Elite Broker and In Focus podcasts and The Adviser Live webcasts. .

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