The proposed sale of Yellow Brick Road’s wealth business is unlikely to impact existing Aussie franchisees, executive chairman Mark Bouris has revealed. According to new reports, the Yellow Brick Road sale will see 56 advisors transferred to rival Sequoia Group in a $2.5m deal.
Bouris said that the new deal will help his company better focus on the loans market, a key operation for the chain’s franchised outlets.
“The decision to exit the management of YBR’s wealth business was driven by YBR’s recent strategic pivot away from wealth management, in which it lacked scale in an increasingly regulated environment, to focus on the mortgage market,” he said.
Further to the advisor transition, the Yellow Brick Road sale of its wealth business will include a cross-referral agreement for Sequoia to act as the company’s preferred partner for wealth advice, and Yellow Brick Road to provide mortgage advice for Sequoia.
Yellow Brick Road sale of wealth business
The new deal comes after Yellow Brick Road slipped to a $37.29m full-year loss on $33.95m worth of impairments against its wealth and lending unit.
“The selection of Sequoia was made after a long marketing, evaluation and negotiating process,” Bouris said in a release.
It’s a big boost for existing Yellow Brick Road franchisees, who have suffered their fair share of failings over the past 12 months. The company’s share prices fell to just 8.8 cents, down from an 11-year peak of 77 cents in mid-2014, with lending volumes dropping 19 per cent in 2019.
Bouris said the Yellow Brick Road sale of its wealth business would not affect the mortgage distribution business or its Australian credit licence, with all Yellow Brick Road franchisees to remain operative under their existing franchise or licence agreements.
“Yellow Brick Road is 100 per cent focused on its mortgage business and is committed to the implementation of its mortgage securitisation initiative,” Bouris said.
The Yellow Brick Road sale of its wealth business is expected to be completed in early 2020 following the transfer of advisors and finalisation of additional implementation aspects.