REA Group snaps up Mortgage Choice

Guess what? REA Group – the global tech giant that operates Australia's leading property websites and real estate websites in Europe, Asia and the US – is expanding once again with a major acquisition of Mortgage Choice. This is a move that will fuel REA’s target of 10% share of Australia’s growing mortgage brokering market. 

The digital enterprise has a solid record of expanding to new markets, organically and by acquisition. This round is no different. REA Group has announced that it has entered into a scheme of implementation arrangement (SID) with major brokerage Mortgage Choice to acquire 100% of their shares for a dizzying $244 million ($1.95 cash per share). 

Mortgage Choice launched more than 28 years ago with a vision of building a national network of ethical, credible and professional mortgage brokers who local communities could trust. Since then it has grown into a fully-fledged financial service provider. Brokers at Mortgage Choice offer customers home loan products via an extensive panel of leading lenders and also assist with personal loans, commercial loans, asset finance, deposit bonds, and risk and general insurances. 

The brokerage has more than 500 brokers and 380 franchises across Australia and over 30 lending partners. It has $54 billion in its loan book and settlements of $11 billion in the 12 months leading to December 2020. According to its interim financial report for the half year to December 2020,  Mortgage Choice reported net revenue of $22.2 million and net profit after tax of $4.1 million. 

A win-win outcome

This addition of Mortgage Choice to REA Group’s global operation which includes franchise broking group Smartline would create an Australian mortgage brokerage with over 900 brokers and long-term growth potential. 

REA’s growth strategy is based on three pillars: property advertising, lifestyle and financial services and global. The total ownership of Mortgage Choice aligns with the Group’s financial services strategy by: 

• Leveraging the group’s digital expertise, high-intent property-seeker audience, and data insights across a larger network;
• Providing an opportunity to establish a mortgage broking business with increased scale; and
• Complementing the existing Smartline broker footprint, and increasing the national broker coverage.

Mortgage Choice will gain the benefit of REA’s advanced digital capabilities and expertise and access to a large and engaged consumer audience – REA’s 12 million monthly web visitors. And REA will be able to provide their audience with more expert brokers to meet their financing needs. 

This buy-out is still subject to conditions being met that involve Mortgage Choice shareholder and regulatory approvals. The scheme is expected to be completed in mid-2021. REA and Mortgage Choice have agreed on a break fee of $2.4 million and reverse break fee arrangements. 

“Our vision is to create se