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Yellow Brick Road in acquisition talks

20 March 2014 4:55PM
Financial products distribution company Yellow Brick Road is involved in "exclusive discussions" with three acquisition targets. The unnamed companies are a consumer product rating and lead generation group (a comparison website), a mortgage aggregator and a mortgage manager.YBR disclosed in an investor briefing on Tuesday that if the deals proceed, the value of its mortgage book would jump from A$2.2 billion to more than $20 billion.The company has also outlined a corporate restructure. It plans to form a holding company, under which it would operate six businesses: diversified wealth management, funds management, consumer leads generation (comparison site), mortgages, financial planning and accounting.Such an ambitious move might seem premature for a company that has yet to make a profit. It lost $3.5 million in the six months to December and its accumulated losses now amount to $22.5 million.However, revenue has been growing strongly and the company has forecast that it will make a profit in 2014/15.The company said it wanted to capitalise on the recent recovery in the property market, the recovery in demand for credit and lower costs in the funding markets.It also believes that the Financial System Inquiry offers "once in a generation potential for change, which creates opportunity."There will be speculation that one of YBR's targets is the mortgage manager Firstfolio, which has struggled over the past few months to complete a recapitalisation agreement and faces debt repayment deadlines.

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