Vishal Garg, Better.com
Digital mortgage lender Better announced on Monday that the company is making its first overseas expansion with the acquisition of Trussle, a UK-based digital mortgage and insurance brokerage backed by Goldman Sachs and Finch Capital, among others.
The deal values Trussle at around $ 9 million, according to people familiar with the matter.
“Better and Trussle were both founded on the understanding that consumers increasingly prefer to use online services to shop and transact on life’s major purchases,” said Trussle CEO Ian Larkin, in a press release announcing the deal.
Truss was founded in 2015.
“We are very excited to be a part of Better, and we are convinced that the future of Trussle is brighter than ever as a member of a large and growing international organization that shares our commitment to make it happen. ‘easier, fairer and more accessible home ownership,’ said Larkin. in the statement.
Amid a pandemic-induced mortgage refinancing frenzy in the United States, Better granted nearly $ 25 billion in loans last year.
Better was started in 2016 by Vishal Garg, a former Morgan Stanley analyst, after a failed deal to buy a house for his family. A cash buyer was able to beat his traditional mortgage lender’s schedule, and that’s when Garg thought there had to be a better way. He used the deposit he had set aside to start Better.
Goldman Sachs is one of the existing investors in Better.
“Better eliminate the high financing costs, massive transaction frictions, tyranny and mind-numbing bureaucracy that come with getting a mortgage and buying a home in the UK through a big box bank,” Garg said in the announcement of the deal. “We have found a soul mate in the Trussle team who has developed a platform we can work with to help every Briton own their own home.”
The UK national homeownership rate fell from a record high of 70.9% in 2003 to 63.9% in 2018, according to the Brookings Institution.
Better’s platform is moving the mortgage process entirely online, giving clients the ability to electronically upload and sign documents, and claims to reduce the closing time from an average of 42 days to 21 days. Garg says the digital-only approach also helps reduce bias against minorities when applying for mortgages. The company previously cited a National Bureau of Economic Research study showing that face-to-face lenders reject minority applicants about 6% more often than comparable non-minority applicants, and also charge minority applicants more for their mortgages. .
What’s more, the company not only generated $ 800 million in revenue last year, but also a profit, although its growth has not been without controversy.
In May, Better announced plans to make its market debut by merging with Aurora Acquisition Corp., valuing the company, ranked No. 15 on last year’s CNBC Disruptor 50 list, at $ 7.7 billion. . The PSPC deal includes a $ 1.5 billion private investment in a private equity arrangement (PIPE) led by SoftBank, which invested a separate $ 500 million in the company just a month before the announcement of the agreement. PIPEs are mechanisms for companies to raise capital from a selected group of investors that make entry into the end market possible.
The transaction is expected to close in the fourth quarter.
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