THE rapid growth in housing lending has been great news for Australian Finance Group, which has a hand in nearly 10 per cent of all new housing loans across the country.
Managing director Brett McKeon aims to lift AFG’s share of housing loans even higher, in addition to building new lines of business.
All going well, Mr McKeon expects AFG will be ready for a stock market listing and $30 million-plus capital raising in one to two years.
AFG, along with other mortgage originators such as Mortgage Choice and Aussie Home Loans, has come from nothing a decade ago to the point where they write more than one third of all housing loans in Australia between them.
A key difference from its competitors is that AFG is a specialist wholesaler, providing technology, training and support to the front-line brokers.
In WA, mortgage originators collectively account for about half of all new loans, so Mr McKeon is targeting growth in other States, particularly NSW and Victoria.
“Our business plan is predicated on still growing, and growing in those States where broker loans are less than 50 per cent,” Mr McKeon said.
The group currently manages a $17 billion loan book and Mr McKeon sees plenty of scope for organic growth until the end of 2005.
Beyond then, he expects growth is more likely to come from acquisitions, which will be easier as a listed company.
Mr McKeon is also working to diversify AFG’s income as a means of achieving a much better price when the company floats.
The diversification includes building a financial planning practice, which Mr McKeon said was “tracking quite well”.
AFG aims to have 100 planners by June 30, and will employ a further 100 planners in each of the next two years to make it one of the top 20 dealer groups in Australia.
AFG has also moved into commercial finance broking, a segment Mr McKeon believes is poised for strong growth.
This market has changed fundamentally over recent years.
Traditionally, brokers charged their clients a fee, but now the banks are paying commissions to the brokers, just as they do in the housing loan market.
Mr McKeon said all of the regional banks paid commissions on commercial loans, and half of the big four banks also paid commissions.
Yet another business line is property development, starting with a $5.5 million project in Dalkeith.
Next cab off the rank will be a corporate finance unit, to arrange capital raisings and restructurings worth between $2 million and $20 million.
Mr McKeon said the directors of AFG had arranged a number of private capital raisings and in future these would be done under the AFG banner, starting in a “small and measured” way.
Mr McKeon said AFG was promoting its technology platform as a further point of difference from other mortgage originators.
He said AFG aimed to build the first comprehensive and independent technology platform for financial services, in much the same way that Perth-based Sealcorp built a technology platform for financial planners a decade ago.
- Mark Beyer