Mortgage broking tycoon Mark Bouris has broken his silence on his Yellow Brick Road company’s share price collapse – and revealed that he wants to merge with a major competitor.
The famous entrepreneur’s Yellow Brick Road business’s share price has fallen to just five cents, a huge drop from 70 cents less than a decade ago and $1.10 when it listed on the ASX in 2008.
The apparent stockmarket bloodbath has sparked criticism – but Mr Bouris on Monday argued to Daily Mail Australia that the share price wasn’t a reflection on his company’s cash position, but the stock exchange’s accounting rules.
Mr Bouris told Daily Mail Australia the share price collapse reflected the fact four big groups now owned Yellow Brick Road, which wasn’t the case 15 years ago.
‘Just in terms of the strategy, why is the share price low, very low?
‘When we first listed, we had very few big shareholders on the register.
‘Just me and NEC – what became known as Nine Entertainment Corporation.’
Mortgage broking tycoon Mark Bouris (pictured with model Monika Radulovic) has broken his silence on his Yellow Brick Road company’s share price collapse – and revealed he wants to merge with a major competitor
The Bouris company is now one of four big investors that owns 75 per cent of Yellow Brick Road, along with Nine Entertainment Corporation, hedge fund Magnetar Capital and Sandon Capital Investments.
The entrepreneur’s Mark Bouris Family Company Investments owns just under 20 per cent of Yellow Brick Road and wants to merge with the likes of Aussie Home Loans founded by John Symond, who has now retired.
Mr Bouris argued that with four shareholders controlling three-quarters of the 330million shares in the company, it was difficult for someone to buy into the company, leading to less demand for shares.
‘Share price is a function of who can buy a large number of shares, or bid for a large number of shares, based on what’s available for sale,’ he said.
‘The share price is a reflection of supply and demand and the supply of new stock, what they call liquidity, supply of stock is limited, so you can’t buy any.
‘If you’re a buyer, you’ve never going to be able to bid enough, you’re not going to be able to pay enough to get enough stock to make it valuable for you.’
Mr Bouris, a former host of Celebrity Apprentice, said a de-listed company would be more attractive to private equity firms, arguing they could more easily up their stake.
‘There’s lots of private equity groups out there,’ he said.
‘And probably unlisted, we’d be more interesting that we are listed because private equity generally speaking don’t want to be in listed environments anyway.
‘It takes a lot of hurdles away but I’m not talking to a private equity group at this stage to buy us.’
While Yellow Brick Road reported a $3.5million loss in the year to June 30, Mr Bouris said this was a reflection on rate rises reducing the value of its brokered loans and impairing its reported underlying earnings before tax which were still positive at $436,000.
‘When interest rates go up, you can lend less – you’re lending less money to more people which means the size of your book minus repayments, your book will reduce,’ he said.
‘What you’ve got to do is you’ve got to make an adjustment against your profit for the reduction in the value of your book.
‘It doesn’t mean anything other than it’s an accounting standard you have to adhere to.’
The entrepreneur’s Mark Bouris Family Company Investments owns just under 20 per cent of Yellow Brick Road and wants to merge with the likes of Aussie Home Loans founded by John Symond (pictured right with wife Amber)
Yellow Brick Road share price has fallen to just five cents, a huge drop from 70 cents less than a decade ago and $1.10 when it listed on the Australian Securities Exchange in 2008
Mr Bouris argued de-listing from the ASX would make it easier for the four big investors to raise capital, arguing the value of its mortgage book was worth three times as much as its $18million market capitalisation.
‘In cash terms, we make money,’ he said.
‘What we receive, minus what we spend every month, on a yearly basis, we make money. We turn over a lot of dough.’
Mr Bouris has also revealed he would like to merge or takeover the likes of Aussie Home Loans, which bought Wizard in 2015.
‘I’m more interested in making us bigger and growing us,’ he said.
‘That would be by acquisition ourselves or merger.
‘That’s probably more of interest to me and the shareholders than doing anything else.’
Yellow Brick Road bought Resi Mortgages for $36million in 2014 and Mr Bouris would like to explore the idea of merging with Aussie Home Loans, which merged with Lendi in 2021, a mortgage broker partially owned by the Commonwealth Bank.
‘If Aussie wanted to merge, I definitely would have an interest in talking to them,’ Mr Bouris said.
‘If they said to me they would be interested in merging Aussie and Yellow Brick Road, I reckon that would be a marriage made in heaven, I would love to do something like that, and/or other brands out there that might want to do something.
‘Merging with another big brand – there’s a few big brands out there who need to get scale.
‘This industry, you either get bigger or you get out.
‘We’re one the four biggest so anyone below us either has to get out altogether or sell or get bigger, buy something else.
‘We’d be interested in picking something up in future.
‘I’m just preparing us strategically for all shareholders to get better value in the future
Mr Bouris founded Wizard in 1996 with help with future media and casino billionaire James Packer during the era when non-bank lenders were quickly making in-roads into Australia’s mortgage market.
Wizard Home Loans was sold to GE Money in 2004 for $500million, helping Mr Packer make a windfall that boosted his worth, following a disastrous investment with OneTel that saw him lose a combined $1billion with future media tycoon Lachlan Murdoch in 2001.
Mr Bouris founded Wizard in 1996 with help with future media and casino billionaire James Packer (pictured in 2008 with then wife Erica Baxter) during the era when non-bank lenders were quickly making in-roads into Australia’s mortgage market
Mr Bouris and Mr Packer are still friends, with Yellow Brick Road’s executive chairman still sending him Christmas and birthday cards.
But he’s unsure if he would want to invest in Yellow Brick Road Holdings.
‘I talk to him, I check on him, see how he’s going,’ Mr Bouris said.
‘Send him Christmas (cards), birthdays and that sort of stuff when he’s in town.
‘Is it possible that he’d want to reinvest in the company? I don’t think so, not at this stage.
‘I certainly haven’t broached it with him.’
Yellow Brick Road shareholders will get the vote on the issue at an annual general meeting on October 24.