Experian Information Solutions Inc., the credit bureau, has made a big bet on the mortgage business - including debt-consolidation loans - by buying an online lead generator.
Last week Experian said it paid $330 million for LowerMy-Bills.com and agreed to pay up to $50 million more over the next two years depending on the Web site's performance.
"The wonderful thing about LowerMyBills.com is that they're very strong in the mortgage lead generating market," said Ed Ojdana, the group president of the Experian Interactive unit, in an interview Friday.
"This is really the first thing that directly connects [Experian's online unit] with the mortgage business." (Obviously, Experian's core business has sold credit information to home lenders for some time.)
LowerMyBills.com has a network of over 400 service pro-viders, including those offering credit cards, long-distance and wireless phone services, and auto and health insurance.
However, in an interview, Matthew Coffin, the firm's founder and chief executive, said that home lending - including first mortgages, home equity, home purchase, and refinancing loans - generates the most queries from its 7.5 million visitors each month.
LowerMyBills.com generates revenue from fees advertisers pay for leads it supplies.
Consumers fill out inquiry forms, providing self-reported credit scores and the type of products they are looking for. LowerMyBills.com matches them with a lender or service provider. No additional fees are earned if a transaction is executed.
This business model differs from that of the most prominent mortgage lead generator, InterActiveCorp's LendingTree, which receives one fee for a referral and a larger one for a closed loan. LendingTree generated $190 million in revenue from 2.2 million visitors each month in 2004.
Mr. Coffin founded LowerMyBills.com in 1999. In the 12 months through March 31 it made $26 million on $120 million of revenue on a pro forma basis.
LowerMyBills.com entered into serious discussions with Experian in October, executives from both companies said.
Mr. Ojdana's unit was launched April 1 and includes an online credit-scoring service, Experian Consumer Direct, and two online marketing companies, MetaRewards and Affiliate Fuel. All 180 LowerMyBills.com employees will stay on, including Mr. Coffin.
The acquisition makes Experian, a Costa Mesa, Calif., subsidiary of GUS PLC of Nottingham, England, the 15th-largest Internet company in terms of revenue in the United States, Mr. Ojdana said.
He said that the goal is to break the top 10 in the next three years through the growth of its existing businesses and further acquisitions.
LowerMyBills.com, of Santa Monica, Calif., had raised only $13 million in capital since its inception. The last round of fund-raising was in 2002.
Split Rock Partners, eCompanies Venture Group, and Evercore Ventures were all investors and are entitled to a share of any future earnout, which will be judged on the basis of earnings before interest and taxes.
