Chris Slater is gearing up for his next big endeavor: tackling both the growing M&A market and Australia's increased reliance on brokers.
The executive – who resigned from his post as chief executive officer of Fintelligence, the asset finance arm of aggregator giant Australian Finance Group (AFG) last May – is set to join Australian private equity firm Recludo Group this coming May as the firm's new head of strategic growth. At Recludo, Slater will be scouting the Australian market for mortgage brokerages to buy, helping them scale, and eventually preparing them for resale.
"Everyone's pretty comfortable now that mortgage broking is here to stay – 76% of mortgages are being done in Australia by mortgage brokers. And there's lots of entrepreneurial money coming into the industry as well, lots of young entrepreneurs coming in. So [Recludo's business model] has a great value proposition," Slater told Australian Broker.
"This sort of business model is not that new, when you look broadly into the business community. It's just that the Australian mortgage industry is about 30 years old, if you think about all the big aggregation firms in the industry," he said, referring to Australia's broker and aggregator market, which began to take shape in the 1990s.
"A lot of people that got into our industry came out of banking," Slater said. "They probably joined when they were somewhere between their late 20s, early 30s to about 40 years of age. So there's lots of business owners who have got very mature businesses, and there's a succession planning opportunity there. That's why we think the timing is right for this type of model to start emerging [in the mortgage brokerage space]."
Meanwhile, while Australia's reliance on mortgage brokers continues to grow, many market players are anticipating increased M&A deal activity in 2025's back half. Globally, M&A activity has been on a downward spiral since early 2022, having fallen 26% between 2022 and 2023, according to S&P Global. Dealmaking made only a modest recovery in 2024, up 8% globally. Yet, Australia seems to be bucking the trend. Total deal volume rose 30% in 2024, compared with 2023, according to MergerMarket data.
"There's plenty of [M&A] activity, from what I've been seeing in the last, probably, six months," Brisbane-based Slater said. "I'll be very surprised if there's not a couple of bigger transactions done in the market, and lots of tier two and tier three-type transactions. There's plenty of opportunity in that space at the moment.
"We're already seeing it," he said. "We're seeing some of the bigger, independent broker firms buying smaller broker firms. We've seen some potential mergers with some of the bigger aggregators in the Australian market. We've already seen Lendi [Group] and Aussie [Home Loans] come together. And we saw a couple that got close and didn't happen. I think we'll probably see it at [the] aggregation level and at the broker level. And I think we'll definitely see it in the lending space. If you look at the customer-owned banking sector, you look at some of the movements that are going on there. We'll probably see it right across the sector."
Last December, Recludo CEO Tim Brown laid out plans for the firm to invest in roughly 50 brokerages over the next five years. Thus far in 2025, Slater said Recludo has closed two transactions, about to close two more and is "hopefully doing five transactions in the next couple of months," with the goal of crossing the 10 deal mark before 2026.
"And we've got a pipeline of people we're talking to. So there's plenty to do," Slater said. "I'm going to be working pretty hard to grow those firms and see if we can make them, really, powerhouse businesses in the Australian broker market."
Recludo's model works by buying up at least 51% of Australian mortgage and finance brokerages. The firm looks at brokerages' people, operations and system processes, risk and compliance, client experience, and finances for longer-term growth, to determine which ones are worth investing in. Slater said Recludo will be targeting firms that have loan books worth more than $300 million.
"We think that's probably about the right size where we can really add a whole lot of value," he said.
"They'll definitely be a focus on succession planning and exit strategy. There's no doubt about that," Slater said. "But we're also looking quite aggressively at the front end. Maybe some young entrepreneurs who are wanting to buy into a business, but don't want to do it on their own. They might come in with us, and over time, buy multiple businesses and help them grow.
"So there'll be a couple of different ways we look at [opportunities]," Slater said. "I think the market is mature enough and it's big enough that there's lots of those opportunities out in the marketplace. And we're seeing heaps of them; we're talking to many firms that are very keen on chatting to us about what [the opportunity] looks like. I'll definitely be getting my hands dirty and working with a lot of business owners."
