Every lender in Australia and every private equity entity known to humanity has already cast an eye over Rams Home Loans over the course of an on-again/off-again sales process that’s taken about three years.
The verdict? Rams is not worth the $885 million that the vendors are asking, and, it seems, getting, through the alternative means of selling 79 per cent of the shares in the company to an invited group of institutional investors, staff, franchisees and invited customers of a select group of stockbrokers.
Note that there are no shares on offer to “the public” in the Rams’ initial public offer: that class of investor may, however, buy shares once they are listed on the Australian Securities Exchange at the end of July.
Also take note that institutional investors and the public buying shares in Rams cannot seek cost savings, cross-sell opportunities, brand leverage or arrange cheaper or better organised funding and all the rest of the tricks that constitute the synergies that would have been available to a trade buyer or switched-in financier.
No, all the typical private investor can do is trust that the Rams’ brains trust has some good ideas to continue creating value that hundreds of well-informed bankers and financiers and their advisers don’t believe is there to be found, at least not at the asking price.
Don’t take this the wrong way: Rams is a great company, it has a terrific brand and those behind it (originally Allco Finance founder John Kinghorn and socialist-capitalist marketing whiz Greg Jones) warrant plenty of admiration for doing their bit to shake up the mortgage market in Australia.
From a standing-start in 1991 Rams mined the same vein as Aussie Home Loans and Wizard Home Loans, among others, to create a vital new mortgage brand.
The trouble with Rams is that is all it ever was … and is: a mortgage brand.
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