The Montreal company nesto, a specialist in online mortgage loans, has acquired a major counterpart established in Vancouver, the CMLS Group, which employs 665 people and manages $50 billion in mortgage loans distributed by brokers.
With this acquisition, nesto aims to become the largest mortgage lender in Canada that does business entirely with cutting-edge financial technologies.
“This acquisition takes us to a whole new scale, with the total loan portfolio increasing from 11 billion at nesto to just over 60 billion with the addition of CMLS. We will also go from a workforce of 335 employees at nesto, mainly in Montreal, to a total workforce of 1,000 people with business offices in the main cities in Canada,” says Malik Yacoubi, president and CEO and co-founder of nesto , during an interview with La Presse.
Among the other reasons for this important acquisition, nesto gains access to the CMLS loan distribution network which is well established in the mortgage broker market. This network will complement nesto’s online mortgage lender activities.
Furthermore, by multiplying its outstanding mortgage loans under management by five, nesto plans to achieve economies of scale, in order to improve its competitiveness in the mortgage loan market.
“With the addition of CMLS, we will be able to accelerate the growth and diversification of our mortgage financing product offering. Also, we will have access to better basic refinancing conditions on the capital markets, which could allow us to offer even more competitive mortgage loan rates,” says the CEO of nesto.
In the meantime, to complete its acquisition of 100% of the share capital of CMLS, nesto benefits from a reinjection of capital through the private issuance of shares and debt securities among its main investors and shareholders: the financial technology investment Diagram and Portage of the Sagard subsidiary at Power Corporation, as well as the venture capital divisions at the National Bank, the Bank of Montreal (BMO) and the financial company IGM (Investors Group Mackenzie).
Following the completion of this transaction, nesto anticipates that “all officers and employees of CMLS will transition to the combined entity,” and that “CMLS shareholders will retain an ownership interest in the combined group.”
Among others, the current CEO of nesto, Malik Yacoubi, will become the CEO of the entire combined group. As for CMLS President Sam Brown, he will continue as president and head of the multifamily mortgage financing “commercial division.”
