The Agency Group Australia Limited (formerly named Ausnet Financial Services Limited) (ASX: AU1) have expanded their national footprint with entry into an agreement to acquire three wholly-owned subsidiaries of ServTech Global Holdings Ltd (ASX: SVT).
The Agency Group Australia Limited will pay up to $950,000 for the acquisition, subject to due diligence.
Via a share sale agreement, the transaction includes the acquisition of:
- The Real Estate Business of Sell Lease Property with approx. 210 Sales agents nationally, $8.1 million revenue (audited FY2017),
- Conveyancing business Complete Settlements Pty Ltd (conveyancing business) $445,000 revenue (audited FY2017)
- Mortgage Broking Business Value Finance Pty Ltd – $100 million loan book, with $1 million revenue (audited FY2017).
Established in 2011, Sell Lease Property (SLP) with over 200 property consultants nationally. SLP was the number one agency in Western Australia by Listings Sold at the 2015/2016 REIWA Awards and awarded eighth place on BRW’s 2016 Fast 1000 Companies in Australia.
While the businesses of Sell Lease Property and the Agency will run as independent brands in the market, the move brings together two of the largest real estate offices in WA and will create cost savings across the group with, according to the companies ASX release, “rationalisation of infrastructure and operational efficiencies already being identified.” This will include outsourcing benefits from ServTech’s back-office support function, with ServTech retaining the business of IT development and maintenance for the new entity.
At the completion of this transaction, the Group now trading under the name of The Agency Group Australia Limited will have approximately 280 real estate agents nationally with approximately 120 sales per month estimated at $80 million per month.
The target number of agents for the group within 3 years is still 600 sales agents.
Commenting on the acquisition, Agency Group Australia Limited Managing Director Paul Niardone said, “This strategic acquisition is expected to enhance our revenue and profits, while also increasing the referrals to our mortgage and settlement service.”
“The Agency will also have a strong national footprint and will have two independent brands in the market place. This is common in other industries, most notably Qantas and Jetstar, with two distinct brands targeting distinct markets but providing great customer service.”
“There are also significant efficiencies since The Agency and ServTech have similar models of referrals into auxiliary services including settlements, property managements and mortgage broking. Our business will also benefit from ServTech’s leading technology platform through its back-office support function.
“The Agency will now review and work on the business model to make sure the acquisition is cash flow positive. To us that is the bottom line, providing value to the company and shareholders.”
Settlement of the acquisition is expected to occur on 1 February 2018 subject to completion of financial, legal and technical due diligence.
Capital Raising
The Agency Group Australia Limited will also undertake a $3 million capital raising by way of a prospectus, which was lodged with ASIC last Friday. These funds would be intended to be directed to the acquisition, the expenses of the offer, and provide additional working capital for expansion of East Coast operations.
The change of name to The Agency Group Australia Limited (from Ausnet Financial Services) was approved at the most recent AGM held on the 28 November.
The company is also backed by Finsure Group, one of Australia’s fastest growing retail finance brokerages with over 1,200 brokers settling over $1 billion a month.
