A fully underwritten A$60 million capital raising by AFG will be used to underpin its own-brand mortgage business, investment in mezzanine funding, IT upgrades or even “market opportunities that AFG might choose to seize.”

A candid presentation to support the capital raise sums up the use of funds as: “Taking a longer term view on the growth of AFG; the majority of the proceeds are to strengthen the capital position, provide liquidity and support strategic growth in the AFG Securities lending book.”

AFG seems little bothered by the impacts of COVID-19.

Residential settlements “are expected to fall” a mix of demand-side factors and also because “lenders are strengthening credit underwriting criteria and restricting lending to certain segments of the economy.”

Most lenders have confirmed to the mortgage broking group that “they will continue to honour trail commission payments on COVID-19 hardship cases for 6 months”.

Certain AFG Directors and management have committed to subscribe for $5 million of the offer and to sub-underwrite up to $690,000 of the Retail Entitlement Offer.

The placement and Institutional bookbuild will be completed today. The Retail Entitlement Offer opens next Wednesday and closes on Tuesday, 2 June.

The equity raising is fully underwritten by Macquarie Capital. Euroz Securities and Morgans Corporate are Co-managers.