The Agency Group Australia’s national roll-out continues to build up steam with the company acquiring high-growth national real estate agency Sell Lease Property in a deal worth up to $950,000.
The ASX-listed company – formerly known as Ausnet Financial Services – will acquire Sell Lease along with conveyancing company Complete Settlements and mortgage broking business Value Finance from ServTech Global Holdings by way of a share sale agreement.
Sell Lease – which has around 210 sales agents nationally – was awarded Number 1 Agency in Western Australia by Listings Sold at the 2015/16 REIWA Awards and came in 8th place on BRW’s 2016 Fast 100 Companies in Australia.
Its purchase will grow The Agency’s real estate agents to 280 nationally within only 12 months of listing, pushing it closer to its target of over 600 sales representatives in 3 years and placing it in the top five real estate groups nationally.
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The deal will also see the company generate around 120 monthly sales worth an estimated $80 million per month, double the size of its settlement business to become one of WA’s top settlement agencies and provide the company with a $100 million loan book.
ServTech – which will retain its IT development and maintenance business Software as a Service (SaaS) – will provide back-office support including virtual services to support the Sell Lease business.
The Agency managing director Paul Niardone said it was targeting 15 per cent margin across its acquired businesses, with rationalisation and infrastructure, operational efficiency savings already identified.
This strategic acquisition is expected to enhance our revenue and profits, while also increasing the referrals to our mortgage and settlement service,” Mr Niardone said.
“The Agency will also have a strong national footprint and will have two independent brands in the market place.”
Mr Niardone said there were significant synergies since The Agency and ServTech have similar models of referrals into auxiliary services including settlements, property managements and mortgage broking.
“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,” Mr Niardone said.
To help fund the acquisition, The Agency is raising up to $3 million through the issue of a maximum 150 million shares at 2c per share. Patersons Securities – acting as lead manager to the offer – says it has received expressions of interest for the minimum subscription of $1.92 million.
Funds will also go towards working capital.
If due diligence is successful, the deal is expected to be finalised in early February 2018.
