Merrill takes Oakwood stake

Merrill Lynch expanded its mortgage empire last week with the acquisition of a 45% stake in Oakwood Financial, the parent company of edeus.

Along with Italian investment company CIR, Merrill Lynch has sunk €300m into Oakwood, landing each investor a 45% stake in the company.

The remaining 10% is held by minority inv-estors and Oakwood’s management team.

Oakwood was founded in 2002 by chairman and chief executive Mike Culhane. To date it has created three businesses including new lender edeus, and acquired majority stakes in two others.

Merrill Lynch acquired Mortgages PLC in 2004, and in July this year bought Freedom Funding, the mortgage lending arm of Freedom Finance.

Mike Culhane says the deal is less of a buyout and more a case of “transferring from one shareholder’s grip to another”.

He adds: “We need more capital to do the things we want to do but the management team will continue to run the company. Oakwood’s five companies all have ambitious growth aspirations and we also want to follow opportunities in new markets.

“We didn’t want passive money, rather money from people who would add value to the company as well as capital.”

Despite edeus and Mortgages PLC being competitors in the bloodthirsty sub-prime market, Culhane says he doesn’t think the investment is a conflict of interest.

“If the market was saturated then yes, there would be a chance that we would cannibalise each other but there’s plenty of room for everyone to succeed,” he says.

The Oakwood Group, which employs over 400 people in the countries in which it operates, intends to extend its operations in markets with high growth potential – Italy and Spain in particular – developing initiatives that build on the experience the company has gained in Australia and in this country.

In 2006, the group hopes to achieve €1.1bn in loans generated.Merrill Lynch expanded its mortgage empire last week with the acquisition of a 45% stake in Oakwood Financial, the parent company of edeus.

Along with Italian investment company CIR, Merrill Lynch has sunk €300m into Oakwood, landing each investor a 45% stake in the company.

The remaining 10% is held by minority inv-estors and Oakwood’s management team.

Oakwood was founded in 2002 by chairman and chief executive Mike Culhane. To date it has created three businesses including new lender edeus, and acquired majority stakes in two others.

Merrill Lynch acquired Mortgages PLC in 2004, and in July this year bought Freedom Funding, the mortgage lending arm of Freedom Finance.

Mike Culhane says the deal is less of a buyout and more a case of “transferring from one shareholder’s grip to another”.

He adds: “We need more capital to do the things we want to do but the management team will continue to run the company. Oakwood’s five companies all have ambitious growth aspirations and we also want to follow opportunities in new markets.

“We didn’t want passive money, rather money from people who would add value to the company as well as capital.”

Despite edeus and Mortgages PLC being competitors in the bloodthirsty sub-prime market, Culhane says he doesn’t think the investment is a conflict of interest.

“If the market was saturated then yes, there would be a chance that we would cannibalise each other but there’s plenty of room for everyone to succeed,” he says.

The Oakwood Group, which employs over 400 people in the countries in which it operates, intends to extend its operations in markets with high growth potential – Italy and Spain in particular – developing initiatives that build on the experience the company has gained in Australia and in this country.

In 2006, the group hopes to achieve €1.1bn in loans generated.