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In its latest move to expand its offering, Challenger has entered into an agreement with real estate and funds management group Elanor Investors.
In a statement to the Australian Securities Exchange (ASX), the investment management company announced that it will sell its commercial real estate business to Elanor Investors Group for $42 million.
Challenger will receive the payment in the form of newly issued securities by Elanor, which will grant them an 18 per cent stake in the group upon the transaction’s completion.
The sale agreement is part of a strategic real estate partnership Challenger has entered with Elanor Investors Group, which includes an exclusive distribution arrangement where Challenger’s multi-affiliate business, Fidante, will distribute Elanor’s existing and new funds, and Elanor would become Challenger’s commercial real estate partner in Australia and New Zealand.
Challenger highlighted that the transaction supports the firm’s strategy to expand its funds management offering by leveraging Fidante’s distribution capability hand-in-hand with Elanor’s real estate platform to establish a new Fidante affiliate manager.
Nick Hamilton, Challenger’s managing director and chief executive officer, said the new offering will provide a “significant uplift in capability and scale”.
“Elanor’s track record in originating high quality real estate opportunities, combined with Fidante’s award-winning distribution capability, will allow us to meet more customer needs.
Further highlighting the advantages that come with the transaction, Challenger voiced its optimism that the strategic venture would result in a “very compelling proposition” for retail, high-net-worth and institutional customers.
“Challenger will benefit from both alignment and access to growth via the acquisition of a strategic stake in Elanor, and we are excited to continue to grow the real estate platform together with the Elanor team,” Mr Hamilton stated.
The tie-up also involves new investment management agreements (IMA) between Challenger Life and CRE third-party clients with Elanor, representing approximately $3.4 billion of funds under management, invested across retail, office and industrial assets.
As a reflection of the strategic partnership, Challenger indicated its plan to become a long-term security holder of Elanor and collaborate with their management to facilitate business growth. This will involve a Challenger representative joining the Elanor Board.
Elanor chief executive Glenn Willis stated the transaction is in line with a key strategic objective of the group to expand its assets under management via the acquisition of a “significant” real estate funds management platform, further describing the partnership as a “transformational transaction” for the firm.
“Combining Elanor’s real estate funds management capability with Challenger’s market-leading capital raising platform delivers significant size and scale benefits, and positions us for further strong growth.”
The transaction, which is expected to be completed on 30 June 2023, remains subject to approval from Elanor’s securityholders and other regulatory approvals.
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