Fintel, the parent company of SimplyBiz and Defaqto, and Mortgage Brain have announced a new distribution agreement and investment.
The deal sees Fintel investing £1.5m in return for 5.8% of the current issued share capital of Mortgage Brain Holdings Limited at the time of the investment.
The Fintel Investment for newly issued shares in Mortgage Brain will allow Mortgage Brain to continue investment in its technology platform and enhance its service to lenders and intermediaries.
With a history spanning over 35 years, Mortgage Brain serves over 15,000 intermediaries with a suite of software sourcing solutions, submissions and CRM.
Under the new agreement, Mortgage Brain’s CRM, sourcing and submission software will be made available to Fintel’s wide network of advisers via its Intermediary Services division.
In consideration of the Fintel Investment, the arrangements also include a separate agreement between Fintel and Mortgage Brain’s shareholders that defines the basis for Fintel to potentially acquire their current issued shares in Mortgage Brain. If such an acquisition of shares proceeds, the valuation attributable to the Mortgage Brain shares would be determined at that time by reference to Mortgage Brain’s financial performance and other factors over the next two financial years.
For the year ended 31 March 2023 Mortgage Brain had revenues of £13.2m and reported an EBITDA loss of £1.96m. Acquisition of ifaDASH Fintel also announced the completion of its acquisition of ifaDASH, a reg-tech solution that assists intermediaries with running an efficient, compliant business. The acquisition was made through Fintel IQ, complementing its existing CRM software.
Through the transaction, Fintel has taken an initial 70% stake in ifaDASH, for an upfront cash consideration of £0.5m, with up to £1.0m of contingent cash consideration based on certain revenue and profitability targets being achieved in the next 12 months.
Fintel also has the option to purchase the remaining 30% equity in the business over the next two years for an agreed multiple of EBITDA.
The acquisition follows the Group’s investment in CRM entrant Plannr.
Neil Stevens, joint CEO of Fintel plc, said: “Our new distribution agreement with Mortgage Brain will enable our members to access their leading mortgage sourcing and submission software as part of our integrated platform.
“Our investment provides a significant cash injection to accelerate Mortgage Brain’s product transformation, enhancing its solutions and providing even greater efficiency to its customers, including Fintel’s extensive membership base.
“We are also delighted to acquire ifaDASH today, as we seek to continue to enhance our CRM capabilities. CRM is critical to our wide network of intermediaries as it improves their efficiency and reduces the regulatory burden, allowing them to focus on generating better outcomes for their clients.”