Iress calls off divestment of UK mortgages business

Iress chief executive Andrew Walsh has announced earlier this week (12 April) that the investment software provider is no longer intending to divest its UK-based mortgage business, citing its performance over recent months as one justification. 

The decision comes after the company announced last year that it would explore potential opportunities to divest its mortgages business in a bid to “achieve higher returns under new ownership”.

“We stated at the outset of this divestment process that we would be disciplined both on price and the future owner’s credentials. After a thorough and well-considered process, we have concluded that the best outcome for our shareholders, clients and people is for Iress to retain the business,” Mr Walsh said.

“The mortgages business continues to perform strongly, contributing £16.1 million of revenue and £6.4 million of NPAT in 2021. In recent months, mortgages has increased its pipeline of opportunities as lenders demand greater scale, efficiency and automation in mortgage processing.

“During the sale process, global market volatility increased and technology company valuations declined. It became evident that purchasers’ valuations were likely to be below levels that represent a reasonable return to Iress’ shareholders. 

“As a result, the board has decided to cease the divestment process and retain the business.”

In its full-year results released in February, Iress said it expects to deliver 7 to 10 per cent growth in segment profit including the mortgage business underlying net profit after tax, adjusting for the growth investments in the new single platform but including the cost of the new incentive scheme, which is expected to increase by between 30 per cent and 43 per cent.

Due to the decision, Iress’ 2025 targets have been upgraded to include the mortgages business that it will now retain. The NPAT base targets for 2025 have increased from $120 million to $135 million.

“By making this decision and communicating it now, we aim to bring clarity and certainty to our clients, people and shareholders,” Mr Walsh said.

“We are moving forward with creating the right environment for mortgages to succeed and achieve its potential, while at the same time complementing Iress’ delivery of its 2025 growth ambitions.”

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