Challenger targets retirement market with merger plan

Challenger has signed a non-binding memorandum of understanding with Apollo Asset Management.  

Announcing its first-half results to the Australian Securities Exchange (ASX), the firm said the two firms had been in discussions for several months as to how they could work together to improve their retirement offering in Australia. 

It said: “The proposed initiative is strongly aligned to Challenger’s strategy and focus on pursuing growth opportunities, as well as further diversifying its business and providing important origination capability to support the growth of both the Life and Bank businesses. 

“Challenger’s relationships in Australian lending markets and its operating platform, coupled with Apollo’s extensive global credit investing capabilities and range of retirement services products, provides significant opportunities and potential value for both parties over the medium term.” 

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In its financial results, the firm said group assets under management were up 20% to $115 billion while funds under management in the funds management arm were also up 20% to $109 billion. 

Normalised net profit after tax was up 21% to $166 million while statutory net profit after tax increased by 27% to $282 million. 

The board declared a fully-franked interim dividend of 11.5 cents per share. 

Nick Hamilton, chief executive of Challenger, said: “As the clear leader in retirement incomes, and one of the fastest-growing active funds managers in the country, complemented by the strategic acquisition of our new digital bank, Challenger has a unique opportunity to meet the needs of more Australians entering and in retirement. 

“Challenger has been an advocate of retirement income reform for many years and we welcome the landmark Retirement Income Covenant legislation. Over time, we look forward to partnering with super funds to deliver innovative retirement income solutions as Australians plan for and enter retirement.  

“The announcement of our non-binding memorandum of understanding with Apollo Asset Management is an exciting step forward in continuing to develop our relationship, as well as being aligned to our strategy and focus on growth opportunities.”