The McGrath Ltd (ASX: MEA) share price has climbed 1.6% in early trade after a late afternoon announcement from the Aussie property management group on Tuesday.
Why is the McGrath share price climbing?
The McGrath share price is lifting after an update on its Oxygen Home Loans business (Oxygen). According to the release, the group has entered into a transaction "that will deliver enhanced scale and optimisation" of the Oxygen business.
Oxygen has raised an additional $2.5 million via a cash injection from a consortium. The consortium led by Doc Klotz, Ben Taylor and Sturt Capital Partners, will take a 55% controlling interest in Oxygen.
McGrath will reduce its interest in Oxygen to a 45 per cent shareholding in the hope of propelling further growth. The Aussie property group will also receive a cash payment in three years of $1.8 million.
The McGrath share price has jumped higher on the back of yesterday's announcement. At the time of writing, shares in the property management group were trading at $0.65 per share.
McGrath will enter a referral agreement with Oxygen and retain one of three board seats. McGrath CEO Eddie Law said the transaction can "unlock the significant potential the merged business will deliver across our platform".
"A more simplified process of writing loans will make it easier for our sales agents to facilitate mortgage delivery to buyers", he added.
The McGrath share price has performed strongly in 2021, climbing 39.1 per cent year-to-date through to Tuesday's close. That is a significant outperformance over many of its peers and well above the 2.6 per cent gain for the All Ordinaries Index (ASX: XAO).
At the time of writing, McGrath has a market capitalisation of $106.7 million and is trading at an 11.1 price to earnings (P/E) ratio.
Foolish takeaway
The McGrath share price has jumped higher in early trade following a late afternoon announcement yesterday.
McGrath will reduce its shareholding in Oxygen Home Loans while retaining a controlling stake and board seat.
