Macquarie Mortgages acquires Canadian mortgage provider Cervus Financial

11 July 2006

The Macquarie Group (Macquarie) today announced it has acquired 100 per cent of Cervus Financial Corp (Cervus), for C$12.5 million, continuing the international expansion of Macquarie’s mortgage activities.

In addition to being a leading mortgage provider in Australia, Macquarie also provides innovative home loan products in the United States and Italy.  

Cervus was established in 2004 as an industry initiative with leading mortgage broker companies and financial providers.  In the short term Cervus will continue to operate as Cervus.  Current Cervus staff will become Macquarie employees.

Macquarie Executive Director and Global Head of Mortgages, Frank Ganis said,  “The acquisition of Cervus is part of Macquarie’s global strategy of selectively entering markets where there is a genuine opportunity to add real value.”

“We believe Cervus is a solid company, which has recently experienced a deficiency in working capital. Macquarie is committed to providing the necessary capital to drive this business forward and is a committed long-term participant in the Canadian market.

“We will be able to build on the existing capabilities of both parties to provide customers with a range of first class financial products and services. Macquarie’s distribution skills and success in developing third party and broker relationships is an excellent strategic fit with Cervus,” he said.

Working exclusively through mortgage brokers, Cervus has carved an industry niche through introducing broker trailing commissions, which is new to the Canadian mortgage market.

Mr Ganis said this is an excellent opportunity for Macquarie to continue to grow its international mortgages business.  The Canadian mortgage market is a rapidly expanding and competitive market that has grown every year for the past 15 years.

According to a 2005 report published by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL), the Canadian mortgage market has grown on average of 6.4% per year for the past 15 years, with an average growth rate to 9.4% over the last two years. CIMBL expects a growth of 10% this year, with the residential market ballooning to $725 billion CAD.

Mr Ganis said that Mike Barrett, the current head of the Australian mortgage business would be re-locating to Toronto as Head of Macquarie Mortgages North America. Mr Barrett has 18 years experience in the Australian mortgage industry, and under his stewardship Macquarie’s loan book in Australia has grown to A$20 billion.  

Mr Ganis said, ”Mike Barrett will join a highly professional management team in Canada, lead by Cervus CEO, Grant MacKenzie, which has considerable experience in providing quality service to Canadian home owners. “

In the US, Macquarie’s mortgage operation continues to provide specialist mortgage products and services to homebuyers.  The Italian mortgages business commenced operations in July 2005 and provides a range of innovative mortgage loans designed to be flexible, personalised and, most importantly, rapidly delivered.

About Macquarie

The Macquarie Group (Macquarie) is a diversified international provider of specialist financial and investment banking services with approximately 8,200 people in 24 countries. The Macquarie Group comprises Macquarie Bank Limited (MBL), a leading Australian investment bank, and its worldwide affiliated entities.

Since 1992 Macquarie has reported successive years of record profits and consistent growth. Macquarie’s approach is driven by a deliberate focus on areas of business where our particular skills and expertise deliver a real advantage for clients. As a result Macquarie has established leading positions in a diverse range of market segments and regions internationally. Technical expertise, strong risk management and an enterprising approach underlie all activities.

Macquarie is a top 20 company listed on the Australian Stock Exchange with a market capitalization of A$15 billion as at March 31, 2006.

About Cervus

Cervus Financial Corp is a Canadian financial services company that was created as an industry initiative with input from leading mortgage broker companies. Cervus is focused on funding and servicing insured conventional and high ratio residential mortgages originated through mortgage brokers.

Cervus has led an industry initiative by introducing its unique compensation and customer retention models to Canadian brokers. Cervus is recognized as the innovator of Canadian trailer fees, the compensation model allows the broker to benefit from an upfront fee, ongoing monthly trailer fees and renewal fees. Cervus is also known to be a strong supporter of the broker, demonstrated through the distinctive “Cervus customer retention model”, where the borrower is the client of the mortgage broker. Cervus does not compete with the broker for clients like other financial institutions do. This aspect of the Cervus initiative encourages brokers to build long term relationships and a book of business, similar to other broker driven industries.   

Cervus is now a proud member of the Macquarie group of companies. Cervus is currently licensed under Ontario, Quebec, British Columbia and Alberta mortgage broker/lender legislation and is seeking similar regulatory approvals in other Canadian Provinces as required. The company’s head office is located in Toronto, Canada, with additional offices in Vancouver, Calgary and in Montreal. For more information, visit the company’s website at: www.cervus.com