Fintech and adviser support services firm Fintel, owner of SimplyBiz and Defaqto, has invested £1.5m in Mortgage Brain and acquired 70% of fintech ifaDASH for up to £1.5m.

Its minority investment in Mortgage Brain is accompanied by a new distribution agreement.

The deal gives Fintel 5.8% of the current issued share capital of Mortgage Brain Holdings and will help the firm to continue investment in its technology platform and enhance its service to lenders and intermediaries.

Mortgage Brain, set up 35 years ago, serves more than 15,000 intermediaries with a suite of software sourcing solutions, submissions and CRM. The new deal will mean its CRM, sourcing and submission software will be made available to Fintel's network of advisers through its intermediary services division.

The arrangements also include a separate agreement for Fintel to potentially acquire the current issued shares in Mortgage Brain. If such an acquisition of shares proceeds, the valuation would be determined by Mortgage Brain's financial performance and other factors over the next two financial years. For the year ended 31 March 2023, Mortgage Brain had revenues of £13.2m and reported an EBITDA loss of £1.96m.

Fintel’s acquisition of ifaDASH, a reg-tech solution that assists intermediaries with running their business, was made through Fintel IQ, complementing its existing CRM software. 

Fintel has taken an initial 70% stake in ifaDASH, for an upfront £0.5m, with up to £1m of contingent cash consideration based on certain revenue and profitability targets being achieved in the next 12 months. Fintel also has the option to purchase the remaining 30% equity in the business over the next two years for an agreed multiple of EBITDA.

The acquisition follows the group's investment in CRM entrant Plannr.

Neil Stevens, joint chief executive of Fintel plc, said: "Our new distribution agreement with Mortgage Brain will enable our members to access their mortgage sourcing and submission software as part of our integrated platform.

"Our investment provides a significant cash injection to accelerate Mortgage Brain's product transformation, enhancing its solutions and providing greater efficiency to its customers, including Fintel's membership base.

Referring to the acquisition of ifaDASH, he said: “CRM is critical to our wide network of intermediaries as it improves their efficiency and reduces the regulatory burden."

The business said both transactions are in line with Fintel's strategy, which balances growth across its core activities, organic investment and complementary M&A, and are financed from Fintel's existing financial resources. It added that both investments increase Fintel's scale, IP and capabilities, capitalising on favourable market conditions for M&A.

Earlier this month Fintel reported a 0.3% rise in revenue to £56.6m for the year ending in December, up from £56.4m in 2022. It completed four acquisitions in 2023 with initial net cash investment of £13.3m. The four acquisitions completed over the period were:

• MICAP, a provider of independent research and advice tools, for an undisclosed sum
• Competent Adviser, a dynamic learning platform enabling advisers to meet increasing regulatory competency requirements, for an undisclosed sum
• VouchedFor, a review site for financial advisers, mortgage advisers, solicitors and accountants, for £7.5m
• AKG, a provider of independent assessments and ratings of financial strength, for £1.6m

Acquisitions are performing as expected, the company said. Two further acquisitions were completed after the end of the year:

• Owen James, the provider of strategic engagement events in UK financial services, for up to £2.3m
• Synaptic Software, an independent provider of financial adviser planning and research software, and Webline, a quote and apply portal for advised sales of protection products, for £4m.