A Goldman Sachs-backed fintech is being sold in a cut-price deal to Better, the US online mortgage lender whose investors include SoftBank and which is in the process of going public.
Better has agreed to buy the British digital mortgage broker Trussle in what will be its first expansion overseas, according to people familiar with the matter.
The deal values Trussle, whose investors include Amsterdam-based venture capital fund Finch Capital as well as Goldman, at about $9m, the people said.
Trussle, which was founded in 2015 and had raised £26.7m in funding rounds by the start of 2020, has sought to harness technology to break the dominance of the traditional mortgage brokers who arrange the majority of UK home loans. Goldman paid £8m for about 20 per cent of the company, according to Companies House filings.
However, Trussle remains lossmaking and has been running a process to sell itself, one of the people said.
The purchase by Better, which is headquartered in New York, is a bet on its ability to challenge dominant incumbent players in Britain’s $1.5tn mortgage market. In the US last year, Better originated $24bn in mortgage loans, up from $5bn a year earlier.
Trussle declined to comment. Goldman did not immediately respond to a request for comment.
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Several start-ups have successfully built a foothold in the mortgage market by spending heavily on marketing and cutting out the fees normally charged to consumers, but have struggled to convert their customer numbers into profits.
Trussle does not publish revenue and profit figures, but its liabilities were greater than its assets by the end of 2019, Companies House filings show. Techcrunch previously reported that it generated revenues of about £2m in 2019, less than half that of its closest competitor Habito.
The company’s founding chief executive Ishaan Malhi abruptly resigned from Trussle early last year, and his replacement Ian Larkin overhauled its management team.
Goldman has stepped up its investments in UK fintechs in recent years, backing companies such as Starling Bank and ComplyAdvantage. The sale of Trussle follows JPMorgan Chase’s purchase last month of the online investment platform Nutmeg, which Goldman also backed.
Despite the economic turmoil unleased by the pandemic, Britain’s housing market has boomed. House prices in May rose by their fastest annual rate in seven years, driven by demand for bigger homes outside the cities and a temporary stamp duty holiday.
Companies such as Better provide mortgages online to home buyers with the aim of then selling the home loan to another financial institution and pocketing the difference. Low borrowing costs have improved affordability despite surging prices.
Better, founded in 2016 by chief executive Vishal Garg, said in May it had agreed to list on the stock market by merging with Aurora Acquisition Corp, a special purpose acquisition company, in a deal which valued Better at about $7.7bn.