Negotiations are underway for Pacific Mortgage Group (PMG) to be sold.
The company owns Mortgage Architects, one of the largest mortgage brokerages in the country, as well as the lender Radius Financial. Radius was ranked 15th in broker channel market share, according to D+H, with 0.9% of the market.
PMG founder Alex Haditaghi officially announced the sale-in-progress to employees and brokers today. In an email to the company, he said:
“…This moment is bittersweet for me as I am officially announcing to you that it is my intention to exit the business and retire as Chairman and Founder of Pacific Mortgage Group to pursue other life ambitions.”
“I am proud of everything we have achieved. We have grown from a small business in a tiny Richmond Hill house, to a company that originates nearly $8 billion in mortgages annually, [has] $2.5 billion in mortgage assets under administration [and has] hundreds of locations coast to coast.”
“When we acquired Mortgage Architects and MyNext (Radius’s predecessor), the company was 45 days away from being bankrupt and was losing approximately $275,000 per month.” (Editor’s note: Now the company is making seven-figure annual profits.)
“Ron Swift, Robert Hyde, Gary Cilevitz, Dong Lee, Albert Collu, George Zhang, Pierre Martin, Luisa Simonetti, Karen Fogel, Meini Ickert, Joe Fakhri, Suzanna Stefanec and the rest of this incredible management team will be staying on board to ensure that the company will continue its tremendous story of success.”
The sale process began earlier this summer and the company expects it to be completed this fall, possibly as early as October. The names of the potential buyer(s) are not being disclosed but the company is actively in talks, having engaged an investment banker to advise on the sale.
The deal would create a liquidity event for all PMG shareholders, many of which include original Mortgage Architects brokers from 2006 when the company started. Apart from that, Radius Financial CEO Ron Swift notes that, “We expect no change from how we operate today, including the brand, management and business model.”
“When I bought this business, within days of closing the deal, both Deutsche Bank and Macquarie Bank—our only two funders—notified us that they are out of market,” Haditaghi recalls. “[Some of the] management team wanted to shut down MyNext and just focus on the brokerage. It was a very hard-fought battle but I insisted on keeping the staff and paying salaries for months even though we had no product to sell. It was the best decision ever.”
The company also took another risk that was very difficult at the time. “I remember having a fight with [certain management and brokers] when I decided to open Radius to outside brokers. It was the toughest one week of my life in the mortgage industry,” Haditaghi says.
But that’s all water under the bridge and the future carries new possibilities, he says. “I believe Mortgage Architects and Radius still have their best days ahead.”
Sidebar: In related news, the company has applied to be a direct mortgage-backed securities (MBS) issuer. Haditaghi hopes for approval “within 30–45 days.” The buyer gains a company with a valuable Canada Mortgage Bond (CMB) allocation. Government-backed CMBs are virtually the cheapest source of mortgage funding. Radius is also well positioned to seek CMB seller status in the future. Albeit, being a CMB seller would require a buyer with deep pockets due to the program’s capital requirements and complexity.