LONDON: Fintel Plc (AIM: FNTL), a leading provider of technology, data and business support services to the UK retail financial services sector, today announced the acquisition of the remaining equity of Mortgage Brain Holdings Limited for a total consideration of £38.4 million. Fintel previously acquired an initial 5.8% stake in Mortgage Brain in March 2024.

Mortgage Brain is a leading mortgage technology provider with strong recurring revenues, customer advocacy, and a track record of growth. The Acquisition strengthens Fintel’s Software & Data division, adding market-leading capabilities across mortgage sourcing, criteria, affordability, CRM and submissions, and uniquely positions Fintel as a software provider spanning wealth, mortgage and multi-disciplinary advice firms.

The Acquisition builds on Mortgage Brain’s two-way product integration with ”Plannr”, the adviser operating platform in which Fintel holds a 49% strategic stake. The integration supports connected mortgage and wealth workflows for multi-disciplinary firms and strengthens Fintel’s proposition, as advisory businesses increasingly seek integrated alternatives to legacy technology platforms. The Board believes this enhances the Group’s ability to capture a growing pipeline of enterprise opportunities.

As part of the transaction, Zahid Bilgrami, CEO of Mortgage Brain, will lead Fintel’s Software & Data division, building on the successful growth of Mortgage Brain and his previous role with Fintel leading Defaqto.

Mortgage Brain Holdings comprises Mortgage Brain, a leading UK mortgage technology provider, and AE3 Media, a specialist mortgage and protection media, events and insights business.

Mortgage Brain provides market-leading software solutions spanning sourcing, criteria, affordability, customer relationship management and mortgage submissions, supporting advisers, lenders and networks across the mortgage journey.

AE3 Media provides digital media, events and insight platforms, providing established routes to market and deep relationships across the intermediary, lender and provider communities.

Mortgage Brain’s contracted customers are responsible for writing c.40% of the UK’s first charge residential and Buy to Let applications.

Strong pipeline of enterprise opportunities, alongside a recently renewed long-term commercial partnership supporting the deployment of AI-enabled workflow and productivity solutions to more than 3,000 adviser licences.

In March 2024, Fintel acquired an initial 5.8% minority stake in Mortgage Brain Holdings for £1.5m.

The remaining equity of Mortgage Brain Holdings Limited has been acquired for a consideration of £38.4m net of cash acquired.

Initial cash consideration (net of cash acquired) was £28.9m on completion, paid from Fintel’s existing financial resources, with £9.5m deferred for 18 months after completion.

Mortgage Brain is expected to deliver c.£12m of revenue in 2027 with £10m coming from Software & Data products and a further £2m from mortgage-related events.

EBITDA expected to reach c.£3.8m in 2027.

Expected to be earnings enhancing in FY27, after deduction of c.£2m in interest on incremental borrowings and c.£1.5m of incremental amortisation of intangible assets.

On a proforma basis, the leverage ratio would be 2.54x immediately after the transaction, taking into account a gross drawn position on the £120m RCF facility of £80m, the additional non contingent consideration of £9.5m, the cash available in the group and the lease arrangements under IFRS16. The year end leverage position is expected to be below 2.5x.

Matt Timmins, CEO of Fintel, commented: “Mortgage Brain is a high-quality software business with strong recurring revenues, attractive growth characteristics and a leading position in the UK intermediary market.

The acquisition strengthens our Software & Data division, expands our capabilities across wealth, mortgage and multi-disciplinary advice firms, and increases the scale of our proprietary data assets.

Mortgage Brain’s capabilities in AI and advice quality review, together with its integration with Plannr, create additional opportunities across our software, services and enterprise markets.

We are also delighted to welcome Zahid Bilgrami and his team to Fintel and look forward to working together as we continue to grow our Software & Data division.”

Zahid Bilgrami, CEO of Mortgage Brain, commented: “Returning to lead Fintel’s Software & Data division is a proud moment for me – it brings me back to the business I led for a decade, this time as part of a far broader proposition across financial services.

Mortgage Brain’s market-leading mortgage data and technology, combined with Fintel’s data and intelligence across wealth, insurance and financial products, creates a data set that is unique in the UK market.

That combination will power more informed decisions for advisers, better outcomes for consumers and deeper insight across the whole industry – and it gives us the platform to build the analytics and AI-enabled solutions that are now emerging.

I am genuinely excited by what we will build together.”