AFG in $10.9 million property lender buy

West Perth-based Australian Finance Group has announced it will purchase a 30.4 per cent stake of Sydney-based commercial property lender Think Tank Group for $10.9 million.

Established in 2005, Thinktank operates nationwide, primarily as a small ticket commercial property lender and has a loan book in excess of $750 million.

Thinktank is expected to achieve an after-tax profit of approximately $3.2 million this financial year.

Under the deal, AFG will have the right to appoint two directors to the Thinktank board.

Completion of the deal is expected to occur today, subject to the transfer and confirmed receipt of consideration.

AFG chief executive David Bailey said the purchase represents the “next evolutionary step” for AFG to diversify its earnings base without undue risk.

“It makes sense to participate further in an asset class that we are comfortable with - both directly through the white label opportunity and indirectly through our shareholding to generate further earnings for AFG,” he said.

Mr Bailey said combining Thinktank’s commercial property lending expertise with AFG’s distribution and securitisation expertise would benefit both firms.

“It will also enable us to deliver further competition and choice to the small to medium enterprise marketplace at a time when it’s most needed,” he said.

“AFG aims to bring the same disciplines to this white label proposition as we have successfully demonstrated with our own residential white label program.”

Thinktank chief executive Johnathan Street agreed with Mr Bailey’s comments.

“In coming together, we see considerable opportunity to not only combine our efforts to great effects across the AFG network, but equally in extending the same emerging advantages and benefits to our wider base of aggregation and broker relationships,” Mr Street said.

Shares in AFG fell 1.05 per cent to $1.42 each today.