Westpac’s fin advice white knight, Viridian, bets on mortgages

afr.com:

Four years after it grabbed headlines buying up Westpac’s financial advice books, Melbourne’s Viridian Financial Group has found an acquisition that would push its revenue over the $100 million mark for the first time.

Viridian’s Glenn Calder (left) with Smartmove’s Darren Little.  

Viridian has agreed terms for a scrip-based deal to acquire Smartmove Professional Advisors, whose 30 brokers settle nearly a billion dollars worth of loans a year across mortgages, commercial lending and asset-backed lending. It would add roughly $20 million revenue, but double Viridian’s client base to 16,000 odd names.

Mortgage broking is currently a relatively small part of Viridian’s operations, employing six names whose total book is about a billion dollar. By contrast, Viridian has $10 billion in total assets under administration across private wealth (where it has more than 100 advisers), and investment management under the Infinity brand.

“Mortgage broking industry’s margins are much tighter than financial planning...it is more standardised than one-on-one advice which is priced on complexity,” Viridian’s boss Glenn Calder said regarding his bet.

“So, efficiency is extremely important for margins and Smartmove has been able to do that. It has nearly 22-hour processing and offices in the Philippines and Nepal,” he said.

While mortgage broking has tighter margins, it is an industry with a much larger client base when compared to financial planning.

Smartmove team of 80, led by CEO Darren Little would move across to Viridian. The combined business would have more than 30 offices and 460 staff.

At $100 million revenue expectations for the 2024 financial year and a target EBITDA margin of 30 per cent, Virdian could be worth $250 million