The Australian Finance Group Ltd (ASX: AFG) share price rose by 11.8% after making two announcements yesterday.
Australian Finance Group is one of the largest loan brokers in the country which has around 3,000 brokers and settles more than $30 billion of mortgages a year.
Australian Finance Group’s FY19 Report And Acquisition
The mortgage broker reported that its revenue increased by 3.8% to $642.8 million in FY19. It also said that its underlying net profit after tax (NPAT) rose by 1.8% to $28.6 million and reported NPAT fell 1% to $33 million.
Both residential and commercial settlements fell around 10% to $31.3 billion and $2.3 billion respectively.
AFG also announced that it was merging with mortgage aggregator Connective, which has a network of over 3,600 brokers across five states. If the two combined it will have 6,575 mortgage brokers and combined mortgage settlements of $76 billion in FY19. Obviously the market is very attracted to the idea of the merger with a strong share price rise.
Connective will receive $60 million of cash and almost 31 million AFG shares, valuing the business at $120 million. After the merger is complete, the business expects to maintain a dividend payout ratio of 60% to 80%.
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