Mortgage Advice Bureau has bought 80 per cent of Scotland-based mortgage broker First Mortgage Direct for £16.5m in cash, valuing the entirety of the business at £20.6m.
As part of the deal, MAB has an option agreement with First Mortgage Direct managing director Ian McGrail to acquire the remaining 20 per cent of the business between 2024 and 2030 for £4m to £10m, depending on the valuation at the time.
The acquisition is being funded using cash and a partial drawdown from a new £12m debt facility arranged with NatWest.
With MAB having decided to repay this drawdown “as quickly as practicable”, the proportion of profits after tax being allocated for dividends will be reduced from 90 per cent to 75 per cent from the final dividend payable in 2019.
MAB managing director says: “This acquisition is central and complementary to our strategic objective to grow our market share of new mortgage lending. First Mortgage is a highly reputable, forward-thinking business of significant scale with a clear strategy to deliver further strong year-on-year growth.
“This enables us to pursue at pace our aim to accelerate group growth through excelling in areas of specialisation, and in particular, building on our omni-channel choice for customers. This approach best positions MAB to benefit in an evolving intermediary sector. MAB’s new technology developments will further strengthen our capability and ambition in this regard.”