The Agency looking again for underwriter to help buy the McGrath rebels

The publicly listed Perth-based real estate and financial services group, The Agency Group, formerly known as Ausnet, has dropped their underwriter for the proposed 550 million share issue which was to help buy a burgeoning Sydney based estate agency.

The company announced it had dropped the underwriter, CPS Capital Group, just seven weeks after their appointment which advised "the acquisition of Top Level was firmly on track."

The proposed raising of $10 million at 2 cents a share was to be used to assist the acquisition of Top Level Real Estate, trading under licence as the The Agency East Coast which is headed by Matt Lahood, and other McGrath rebels, Ben Collier, Shad Hassen and Stephen Chen.

The shares were trading at 1.6 cents today, as boss Paul Niardone indicated he hoped the termination allowed for "greater scope and additional capacity to raise additional funding."

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Attempting to become a national group, The Agency which is headed by Paul Niardone, saw its shares initially close down by 12 per cent at 1.5 cents.

The Fairfax Media business gossip column, CBD published an unconfirmed suggestion The Agency principals "have had to stump up their own cash to keep the operation afloat."

The Perth-originated Ausnet leadership have long aspired to secure the east coasters, but been unable to pull it off.

The last official update had indicated the east coast Top Level with some 90 agents was achieving "exceptional results."

The shareholders were told the east coast team had 380 settled sales, for the 11 month period from April 2017. 

It had "achieved exceptional results with total sales of $695 million, total commissions of $10.2 million and 380 settlements for the year up to March 2018." 

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The Agency Group utilised the shell company Namibian Copper, for its late 2016 ASX listing as Ausnet. The company raised $5.8 million as part of a backdoor listing and recapitalisation with shares initially trading at 3.3 cents on its 2016 listing. They shortly after hit 4 cents after the raising jointly underwritten by Patersons Securities and Transocean Securities and backed by retail finance broker Finsure Group, which took an initial 8 per cent stake in Ausnet. 

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The group has expanded mostly in WA with the SLP group now incorporated into its results.

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The Agency opened the doors of its Bondi Beach office early last year, billed as a “disruptive and fast growing real estate sales and property management business.”

It represented an experimental break from the traditional franchise model - aiming to be a true one-stop shop offering selling agents, property management services, as well as mortgage-broking services, settlement agents and insurance brokers. The stockmarket has been told agents have been referring around 60% of all sales for financing broking.

But the big difference was in contrast to the traditional franchise agency model, The Agency offered lucrative commission splits for the agents.

Franchise agencies usually take a 50:50 split on all the agents’ sales commissions, rarely with more generous 60:40 splits in the agents’ favour.However, The Agency offered agents a starting split of 75:25 split in the agents’ favour, rising to 80:20 and 85:15 as and when higher targets were met.

Agents are also offered a buy-in on the property management income stream.

That split lured top-performing selling agents away from leading east coast franchise groups.

On the announcement of CPS agreeing to get The Agency's fundraising underway, Paul Niardone said CPS Capital Group had "a strong track record of fundraising success and to have them support our capital raising is a significant milestone in the advancement of this transaction.

“We recently undertook a roadshow to meet with, and present to, a range of Australian small cap funds, institutions, and received overwhelmingly positive feedback."

But is appears the group is struggling to get east coast credibility. Established in 1996, its aim has been to become the "most reliable and trusted real estate and financial services company in the Asia Pacific region."

Subject to successful completion of the proposed capital raising, CPS Capital Group was to receive 6% of the underwritten amount, plus 2,000,000 ordinary shares in the company.

(An earlier version of this article indicated the Agency had lost its underwriter. It actually terminated its underwriter.)