The Agency Group Australia (ASX: AU1) has entered into an agreement with CPS Capital Group to underwrite a minimum $10 million capital raising to fund the acquisition of the Top Level Real Estate business.
The Agency, which has extensively recruited McGrath real estate agents over the past year, announced earlier this month its intention to take over Top Level to boost its presence on the east coast of Australia.
The Perth-based company intends to raise the $10 million through the issue of fully paid ordinary shares at an issue price of $0.02 a share.
"We are firmly committed to the proposed acquisition of Top Level and are pleased to have executed an underwriting agreement with CPS Capital Group, who share our commitment to this transformational transaction," says The Agency managing director Paul Niardone.
CPS Capital Group will receive 6 per cent of the underwritten amount plus two million ordinary shares as part of the deal.
When the acquisition is completed it will combine two of the most disruptive players in the real estate industry with 131 agents, 114 staff and more than 4,000 property managers.
The Agency is a Perth-based real estate and financial services group of companies and was formally known as Ausnet Financial Services.
It recommenced trading on December 16, 2016, on the ASX under the ticker AU1 and it followed the acquisition of Ausnet by Namibian Copper Ltd via a reverse takeover after raising $5.8 million in a heavily oversubscribed capital raising.
McGrath agents poached as part of national expansion
Ausnet is backed by one of Australia's fastest growing retail finance brokerages, Finsure Group, and it consists of a group of businesses which deliver finance broking, real estate services, settlement services, property management, project marketing, insurance and financial planning.
The company initially targeted the Western Australian market but has recently undergone rapid expansion and recruitment to create a national business.
That began when The Agency lured McGrath Estate Agents head of sales, Matt Lahood, to become its CEO in April 2017 and within a short period of time, at least 12 ex-McGrath agents including stars Ben Collier, Shad Hassen and Steven Chen were recruited on big salaries, and big commissions, to the new player.
Those defections have been part-blamed by McGrath (ASX: MEA) on the chaos that has caused its share price to sink to record lows.
Its shares were priced at $2.10 ahead of its market listing in December 2015 and have tested the $0.40 mark in recent months as the company's entire board, excluding founder John McGrath, resigned en-masse last month following a series of profit downgrades.
John McGrath also faced allegations he had accrued gambling debts of $16 million, funded by a $100 million lending facility. He has denied this.
As the McGrath business struggles for survival, its upstart rival continues expanding and The Agency recently recruited former Marshall White estate agent Michael Paproth to head up its newest office in Melbourne's Albert Park.
Paproth reportedly sold more than $170 million worth of real estate last year and holds a number of suburban sales records and he referred directly to the former McGrath big hitters on his appointment.
"To be able to work with The Agency team including Matt Lahood, Shad Hassen, Ben Collier and Steven Chen is very exciting," Paproth says.
Business News Australia
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