Big purchase boosts its mortgage offering as business booms
REA Group, Rupert Murdoch’s Australian real estate company, has continued to increase its footprint in the mortgage market by acquiring a near 20% stake in Athena Home Loans. This investment comes as part of REA’s broader strategy to enhance its financial services offerings, while simultaneously continuing its pursuit of a major acquisition in the United Kingdom.
On Thursday, REA revealed its agreement to purchase a 19.9% share in Athena, a digital non-bank lender, for up to AUD 62 million (£31.5 million) from its existing cash reserves. This investment will allow REA to gain two seats on Athena’s board of directors, giving them greater influence over the direction and operations of the mortgage lender. The two companies have already established a strong working relationship, having formed a strategic partnership back in 2022. This partnership enabled the creation of the Mortgage Choice Freedom product line, which was responsible for generating AUD 1.2 billion in settlements in the fiscal year ending June 2024.
REA’s CEO, Owen Wilson, expressed optimism about the deal, stating, “An equity investment builds on the success of our innovative Mortgage Choice Freedom home-loan products and forms a strong alliance to support the delivery of our strategy.” He emphasized that this move will not only strengthen their relationship with Athena but also bolster REA’s commitment to providing Australian consumers with a wider range of mortgage options through their Mortgage Choice financial services arm.
At the same time, REA is in the midst of an intense battle to acquire Rightmove, the largest online property platform in the UK. Rightmove has been the focus of multiple acquisition attempts by REA Group, but each bid has been rejected by the British company. Rightmove recently turned down REA’s third offer, which valued Rightmove at £6.1 billion. Despite raising the offer to £7.70 per share, Rightmove indicated that the proposal still fell short of its valuation, stating that it "materially undervalues the company and its future prospects."
This bid has garnered significant attention in the financial world, especially considering that REA is controlled by Rupert Murdoch’s News Corp, which also owns The Wall Street Journal and Dow Jones. Despite these rejections, REA is clearly not backing down and sees a number of strategic opportunities for it – including the launch of mortgage offerings in the UK.
The company is exploring the possibility of securing a multibillion-dollar loan to fund the acquisition, having reportedly entered discussions with financial institutions such as Bank of America and Deutsche Bank to secure the necessary funding. While no loan amount has been finalised, reports suggest that the loan package could total over USD 5 billion, showcasing the seriousness of REA’s attempt to get a British foothold.
Meanwhile, some Rightmove shareholders have expressed openness to negotiations, provided REA increases its offer. These shareholders have pointed out that while Rightmove’s board remains resistant, there may still be room for constructive discussions if the bid becomes more attractive. REA has also signalled its willingness to engage directly with these shareholders, urging them to encourage Rightmove’s board to reconsider entering negotiations.
This acquisition attempt comes as Rightmove faces challenges of its own, including a stagnating share price. REA’s Wilson has highlighted the opportunity for Rightmove to benefit from REA’s expertise in digital property services and mortgages, particularly as REA continues to expand its offerings both in Australia and internationally.
Back in Australia, REA’s investment in Athena comes at a time when the mortgage lender is experiencing significant growth. Athena CEO Nathan Walsh has described the company as being on an exciting upward trajectory, with the REA investment further validating Athena’s business model. “We are thrilled to have the support of a culturally aligned company like REA,” said Walsh. He added that the investment would build on the success of their existing partnership and drive further innovation in the mortgage sector.
Athena has settled over AUD 8 billion in home loans to date. The company’s second Residential Mortgage-Backed Securities (RMBS) issuance under its Olympus programme has raised an additional AUD 1 billion in debt funding, underscoring its strong position in the market
