Bank of Queensland announced today it had acquired a $78 million debtor finance business as part of its ongoing strategy of building a national retail and business banking network.
BOQ paid a premium of $12 million to purchase the Debtor Finance division of Orix Australia and, with it, acquire a national distribution network managing $78 million in net tangible assets.
Managing Director David Liddy said the acquisition follows the niche strategic purchases of ATM Solutions and UFJ Equipment Finance over the last two years.
“This purchase strengthens our position in the fast-growing and competitive debtor finance market, and extends our national reach,” Mr Liddy said.
“Importantly, like our very successful acquisition of the equipment finance business two years ago, it opens a new customer market up to the BOQ service experience. The acquisition is EPS accretive from day one,” he said.
BOQ has gained a strong reputation for building on its acquisitions through growing ATM Solutions from 900 machines to more than 2000 before selling the business to Macquarie for a $15.5 million net profit after tax, while its equipment finance business has doubled its sales in the two years since it was acquired.
Orix’s Debtor Finance division has offices in all mainland States and compliments BOQ’s fast growing equipment finance, debtor finance and business banking growth across the country.
“With this acquisition BOQ gains 3 per cent of the national debtor finance market, with the largest percentage of this business in our new markets of New South Wales and Victoria,” Mr Liddy said.
Group Executive Business Banking Ross Norton said the key to the success of the acquisition would be BOQ’s integration with the well-credentialed Orix team.
“Our intention is to significantly grow the business through the excellent team Orix has built, along with our own team of debtor finance specialists,” Mr Norton said. BOQ intends to retain the current 35 Orix staff employed by the division.
The debtor finance market has been growing at 30 per cent compound over the last several years. This follows a trend of SME businesses utilising business assets as opposed to the family home to secure funding lines.
“Essentially, this allows businesses to turn their outstanding accounts receivables into cash. This is nothing new, but has gained increased popularity and market acceptance in the last few years,” Mr Norton said.
The following additional information provides some further detail on this acquisition:
- Estimated annual after tax earnings of this business is $1.8m;
- Total goodwill on acquisition of approximately $14.0m, including costs of acquisition;
- The Bank expects this acquisition to be EPS accretive immediately;
- The business has operations in NSW, Victoria, Queensland and Western Australia with most customers spread throughout these States and has exposures across various industries; and
- The acquired operations will be integrated into the Bank’s existing debtor finance operations, and will form a platform for further expansion outside Queensland.