Two prominent lenders in the alternative/mortgage investment spaces are joining forces
Neighbourhood Holdings’ deal to acquire Fisgard Asset Management turned plenty of heads in the mortgage industry after it was revealed during the weekend’s Mortgage Professionals Canada (MPC) national conference.
The move brings together two major players in Canada’s alternative and mortgage investment lending channels serving more than 5,000 brokers combined, according to Neighbourhood founder Alex Conconi.
The combined entity creates a 65-person organization with almost $800 million under management, chief executive officer Taylor Little (pictured, top left) told Canadian Mortgage Professional, with one manager moving forward but two funds to be kept separate.
“What brokers will see is one brand out there – that’ll be Neighbourhood,” he said. “So if you want to submit a deal to Fisgard, it’s Neighbourhood. The same underwriters – just all on one team, one platform. The same BDMs all on one team, one platform. But then the investor piece is generally going to stay the same.”
The company’s exempt market dealer to bring on new investors, meanwhile, is being rebranded as Fisgard Capital Management in a testament, Little said, to Fisgard’s strong brand and longstanding reputation in the field.
And he believes there’s plenty to like for brokers. “They’ll see one unified product suite. There’s been some harmonization on the underwriting guideline side, and I think there will be improvements for brokers,” he said. “The product is better on both sides now.
“We have a larger business development team and more underwriting. So brokers have more support right across the board from sales right through to underwriting.”
Execs highlight 'synergy'
The move – for which no sale price has been disclosed – sees Neighbourhood, founded in 2015, acquire a lender with a much longer track record in the mortgage space (Fisgard opened its doors in 1994).
And Conconi’s LinkedIn post announcing the news highlighted the central role Fisgard executives Rafer Strandlund (pictured, top right) and Hali Noble will continue to play after the acquisition.
Strandlund said the deal was the right one for Fisgard. “People are asking if I’m going to retire, and the answer is no,” he told CMP. “I feel like I’ll be reinvigorated to do more with a group of people that are really smart and have the support that we need to grow it together.
“It’s true that any responsible business owner should be looking to the future and how they’re going to sell or carry on good business and protect their investors. These guys are going to take all that we’ve built, making it better. That was super important to us – carrying on our staff, carrying on our vision and our core values was huge. And they aligned. It seemed like this perfect synergy to move things forward.”
It was no secret in the mortgage industry that Neighbourhood was in the acquisition game, having publicly discussed plans to expand in recent years.
What made the Fisgard deal different from others on the table, Little said, was that it allowed the company to acquire a strong player in the market, rather than one that was struggling.
“The deals we’ve looked at have generally been out of distress. And every time we looked at a deal that was in that zone, it was not interesting to us,” he said. “Fisgard is very strong. The brand is strong. The team is strong. The capital is strong.
“And that was really attractive to us because the ones that were not strong that we’ve looked at would be harder to actually execute on.”
Alt-A product on the way; further M&A possibilities
Jared Stanley continues as senior director of originations, while longstanding Fisgard executive Reaza Ali has taken on the role of national broker relations manager at Neighbourhood.
Among Stanley’s current priorities: launching Neighbourhood’s new alt-A product, with no lender fee and direct payment to the broker. “We’re rolling it out gradually for brokers who select the two-year term,” he told CMP, “and we’ve made sure the infrastructure is in place to support the added volume.”
The alternative and MIC lending spaces face an interesting few years ahead, particularly with recently introduced FINTRAC rules increasing compliance oversight and ramping up anti-money laundering (AML) responsibilities.
Little said the new combined enterprise is well placed to meet those challenges and raised the prospect of further deals in the sector as smaller lenders potentially struggle to adapt.
“We feel really confident about this new world and as the regulations get more and more intense, which they will, it’s going to get harder and harder to operate,” he said.
“So we’re rally interested in now in what the next couple of years are going to look like… and maybe there are some future acquisitions and some more talk about it.”
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