11 July 2006
Macquarie Mortgages today announced it has acquired 100 per cent of Canadian-based Cervus Financial Corp (Cervus), for C$12.5 million (c. A$15 million), continuing the international expansion of Macquarie’s mortgage activities.
In addition to being a leading mortgage provider in Australia, Macquarie also provides innovative home loan products in the USA and Italy.
Cervus was established in 2004 as an industry initiative with leading mortgage broker companies and financial providers. In the short term Cervus will continue to operate as Cervus. Current Cervus staff will become Macquarie employees.
Macquarie Bank Executive Director and Global Head of Mortgages, Frank Ganis said: “The acquisition of Cervus is part of the Bank’s global strategy of selectively entering markets where there is a genuine opportunity to add real value.”
“We believe Cervus is a fundamentally excellent business, which has recently experienced a deficiency in working capital. Macquarie is committed to providing the necessary capital to drive this business forward and is a committed long-term participant in the Canadian market.
“We will be able to build on the existing capabilities of both parties to provide customers with a range of first class financial products and services. Macquarie’s distribution skills and success in developing third party and broker relationships is an excellent strategic fit with Cervus,” he said.
Working exclusively through mortgage brokers, Cervus has carved an industry niche through introducing broker trailing commissions, which is new to the Canadian mortgage market.
Mr Ganis said this is an excellent opportunity for Macquarie to continue to grow its international mortgages business. The Canadian mortgage market is a rapidly expanding and competitive market that has grown on average 6.4% per year for the past 15 years with the average growth rate accelerating to 9.7% over the last two years.
As part of that growth, mortgage brokers in Canada have grown market share from 5% to 28% in the last seven years, with an expectation that this growth rate will be sustained over the medium term.
Mr Ganis said that Mike Barrett, the current head of the Australian mortgage business would be re-locating to Toronto as Head of Macquarie Mortgages North America. Mr Barrett has 18 years experience in the Australian mortgage industry, and under his stewardship Macquarie’s loan book in Australia has grown to $20 billion.
Mr Ganis said ”Mike Barrett will join a highly professional management team in Canada, lead by CEO, Grant MacKenzie, which has considerable experience in providing quality service to Canadian home owners. “
In Australia, Macquarie pioneered cheaper loans for homeowners when it helped finance the mortgage origination industry in its early stages through the securitisation of mortgages. Macquarie’s Australian mortgage business is also the exclusive funder for the Aussie Home Loans and Virgin Money Home Loans businesses.
Craig Thompson, previous Head of Business Banking will become the new head of Macquarie Mortgages’ Australian operations.
Cervus Financial Group Inc. is a Canadian financial services company that was created as an industry initiative with leading mortgage broker companies. Cervus is focused on funding and servicing insured conventional and high ratio residential mortgages originated through mortgage brokers.
Cervus has led an industry initiative by introducing its unique compensation and customer retention models to Canadian brokers. Cervus is recognised as the innovator of Canadian trailer fees, the compensation model allows the broker to benefit from upfront fee, ongoing monthly trailer fees and renewal fees. Cervus is also known to be a strong supporter of the broker, demonstrated through the distinctive “Cervus customer retential model”, where the borrower is the client of the mortgage broker. Cervus does not compete with the broker for clients like other financial instititutions do. This aspect of the Cervus initiative encourages brokers to build long term relationships and a book of business, similar to other broker driven industries.
Cervus is now a proud member of the Macquarie Group of Companies. Cervus is currently licensed under Ontario, Quebec, British Columbia and Albert mortgage broker/lender legislation and is seeking similar regulatory approvals in other Canadian Provinces as required. Cervus’ head office is located in Toronto, with additional offices in Vancouver, Calgary and in Montreal. For more information, visit the company’s website at: www.cervus.com.
For further information, please contact:
Macquarie Bank Limited
Tel: (612) 8232 3294
Boudreau & Associates
Tel: (416) 588 0552
Tel: (416) 861 1315 ext.266