Lendi-Aussie merger details revealed

On Wednesday (16 December), online home loan platform Lendi and the Commonwealth Bank of Australia (CBA) announced that they had signed a binding heads of agreement to merge Lendi with Aussie Home Loans (Aussie).

Under the proposed merger (subject to ACCC consultation and other customary conditions), Lendi shareholders would hold the majority shareholding of 55 per cent in the merged business, while Aussie’s current owner, CBA, would hold a 45 per cent shareholding.

CBA would also receive deferred consideration and a pre-completion dividend of $105 million in aggregate (subject to adjustments) and continue to provide funding for the Aussie Select branded home loan product. 

Speaking to Mortgage Business following the announcement, Lendi co-founder and CEO David Hyman said the attraction of the deal was the opportunity to combine Lendi’s market-leading digital technology with Aussie’s iconic brand and significant broker and franchisee network to create a market leader in the Australian home loan market.  

Mr Hyman said: “I think everyone would appreciate that when John Symond set [Aussie] up 30 years ago – and together with James [Symond] more recently – they built an iconic brand in the space. They were the original disrupter. I can still remember seeing John on TV saying: ‘We’ll save you’ and taking it to the banks. 

“Clearly, today, [Aussie is] one of the most recognisable brands in financial services. They have a significant level of distribution, their brand recall is in the 80 per cent range, and they have a great offering to brokers.

“Lendi has been investing heavily in technology, and that has been driving a lot of our growth – we’ve been growing 40-50 per cent year-on-year – and we are a sizeable player in the space today. So, the opportunity to take two great businesses and put them together to have significant levels of complementary skillsets, people and distribution channels... that really powers and supercharges the growth that both businesses are already experiencing.”

Two brands operating under a single platform

The Lendi CEO told Mortgage Business that while there were still matters that needed to be worked out, “one of the things that we know for certain is that both brands will prevail”.

“Lendi today operates both the Lendi brand and the Domain home loans brand, so a multi-brand strategy is already very much in our wheelhouse. So, the intention is for the Aussie brand to prevail, it is very much a strong brand and is one of the reasons that attracted us to the opportunity,” he said.

“There will be no crossover of customer experience. If a customer engages with Aussie, they will get an Aussie experience through an Aussie broker, and if they engage through Lendi, they will get a Lendi experience through a Lendi broker.

“What will happen is, in time, the Lendi platform will start to power some of the Aussie branded experience,” the Lendi CEO elaborated. “That will happen over two layers; it will be progressively brought in from a customer perspective and then, on the broker side, we’ll progressively and consultatively work with the brokers on a rollout plan over the forward two years on an opt-in basis.

“So, if you fast forward to a couple of years’ time, we will have a single platform powering both customers and brokers but very much two distinct brands operating separately.”

Mr Hyman added that it was “very much business as usual for the brokers for the staff and the leadership teams on both sides” with executive teams and both leadership teams continuing to operate as they do today for the near future. However, he added that a merged company committee will start to “work through the integration plans, and ultimately build out the strategies for the merged business”.

"That will evolve over time, but that is how we are thinking about it to start with,” he told Mortgage Business.

>He concluded: “I’m really looking forward to working more closely with James on the strategy and the thing that is really exciting is that both businesses are on a growth pathway, and this just becomes a massive acceleration case for both brands.”

Speaking to our sister brand, The Adviser, James Symond echoed these sentiments, saying: “[W]e’re taking the best out of technology and digital expertise with Lendi and combining them with the bricks and mortar, award-winning brand and broker network that Aussie has.

“The reason for the deal overall, ultimately, is to expand our net for greater customer choice. That’s the ultimate reason why we’re doing this – to be able to reach more customers, to reach more people, to do more business from a bricks and mortar point of view, and do more business from a digital point of view, for those customers who today and ongoing want to deal with the business in that manner.”

Completion of the transaction is subject to ACCC approval and other customary conditions and is expected to occur by “mid-calendar year 2021”. 

[Related: Home loan platform appoints new CMO]