Wizard To Use $50m Injection On Expansion
Sydney Morning Herald
Monday May 28, 2001
Non-bank lender Wizard Mortgage Corp will use an estimated $50 million injection from clients of Deutsche Asset Management to purchase home loan portfolios and bankroll the nationwide expansion of its shopfront network.
While Wizard would not disclose the size of Deutsche's capital injection on behalf of its institutional clients, Ecorp/PBL said its investment had doubled in value since committing $25 million for a half share about two years ago.
Deutsche's injection of funds gives it a 33 per cent stake and dilutes the interests of founder Mr Mark Bouris and Ecorp/PBL to a combined two-thirds but neither have sold any of their interest.
Mr Bouris said on Friday the investment did not reflect any shortage of capital but would help fund expansion and acquisitions.
``I don't need any more capital. We already raised $25 million [from Ecorp/PBL]," he said. ``I have not been out looking for anybody, unlike a lot of other organisations are. We had mutual acquaintances and it just came up."
Wizard is turning a small loss for its shareholders but, according to Mr Bouris, Wizard was in ``the annuity business" and was not concerned about accounting losses at this stage.
Wizard is one of several non-bank lenders to have emerged in recent years offering cheap home loans, but the distribution structures and greater capital base of the banks had allowed the banks to win back ground and there are expectations that some originators will withdraw from the market.
But Mr Bouris said the margin pressure on Wizard had not changed ``for a couple of years" and the group derived savings from its links with Australian Mortgages Services.
Mr Bouris highlighted WA-based Home Loans' recent acquisition of FAI Home Loans' portfolio as an example of the opportunities available.
``I don't know ultimately what we are going to use the money for. We have a number of things in our sights.
``I believe there's going to be rationalisation in the market."
Wizard already has a target to have 100 shopfronts around Australia by mid year. Mr Bouris said that the target had been extended to 200 by December 2002, with a particular plan to extend beyond the eastern states.
Mr Bouris said one of the major banks had made an offer to buy into Wizard but this had not led anywhere.
While there is little independent analysis of the non-banks' market share, Mr Bouris said Wizard had written $450 million worth of loans last month, up 20 per cent on the previous month and indicative of a rebound in home-lending market.
This was partly refinancing volumes and partly some impact from the first home buyer's grant but there was also lots of lending to buy investment property.
Mr Bouris also noted that the group's average loan size had jumped 10 per cent in the past six weeks to more than $200,000.
© 2001 Sydney Morning Herald
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