Packer Expands Into Mortgages
Sydney Morning Herald
Wednesday August 18, 1999
Mr Kerry Packer's PBL and its ecorp affiliate have bought a 50 per cent stake in Wizard Mortgage for $25 million in a deal that secures mass marketing support and Internet distribution on the ninemsn portal for its wares.
Ecorp chairman Mr Daniel Petre said his company had ``a very large appetite for financial services on the Internet" and would look to make further acquisitions by issuing scrip or cash. ``In this case, Wizard needed cash," said Mr Petre.
The Wizard stake is held equally by ecorp and PBL.
Yesterday's deal between PBL and Wizard is believed to have resulted from a private friendship between Wizard founder Mr Mark Bouris and Mr James Packer, and comes as PBL seeks to invest in an ever-broader range of businesses.
But even though PBL and ecorp will be paying $25 million in total for their half-interest in Wizard, a part of those funds will flow back to PBL in the form of advertising spending by Wizard, in a deal reminiscent of the investment by PBL and News Ltd in One.Tel.
A new PBL and ecorp unit, tentatively named Mortgage Co, has been established as an operational vehicle for the joint investment in Wizard.
The deal was not a ``pure Net play" by PBL because in the short term Wizard needed mass advertising to build its brand and to compete, Mr Petre said.
``This business has an Internet component that will grow, but Wizard needs physical media in greater proportion to ninemsn."
The managing director of research company Cannex Australia, Mr Andrew Willink, estimated that about 60 non-bank mortgage managers, including Wizard, Aussie Home Loans and RAMS, accounted for 12 to 15 per cent of the home loan market.
Wizard claims it will write $180 million in mortgages this month and has received $1.2 billion in mortgage applications in the past seven months. An eWizard Internet site was launched in April.
Mr Bouris said the mortgage company already had a ``high" advertising commitment on PBL media. ``As part of our undertakings, Wizard has agreed to commit over the next few years further significant sums to the Nine Network and now also to ACP and ecorp businesses," he said. That amount was not disclosed.
PBL chief executive Mr Nick Falloon said the investment in Wizard would enable it to offer broader financial services to its customers.
The growth of the Internet as a distribution channel for mortgage brokers and other finance companies had accelerated in Australia in the past month, said Cannex's Mr Willink. As well, a number of international mortgage brokers were preparing to enter Australia through joint ventures with local companies, he said.
But the amount of business being done over the Internet in Australia could not be quantified, Mr Willink said, saying he doubted the ``extremely hyped figures in the marketplace".
Liberty Financial's LoanNET broking site claims to have referred $150 million in approved applications. Adelaide's eloan, an Internet spin-off of Great Southern Home Loans, claims $20 million in applications a month.
Internet mortgage sites have become hot properties in the US, with two of the largest online brokers, E-Loan and mortgage.com, going public.
News Corp's Internet joint venture with Softbank, eVentures, is planning to launch E-Loan in Australia and is in talks with the Adelaide mortgage site of the same name.
Mr Petre said ecorp had turned down an opportunity to invest in a mortgage broker, which he termed a ``choice brand".
``I'm not convinced that choice brands will work in this country as they have done in the United States," he said.
© 1999 Sydney Morning Herald
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