Challenger moves forward with joint venture

In an update to the ASX, Challenger Challenger Ltd (ASX:CGF) chief executive and managing director Nick Hamilton said he was delighted to have made progress in developing strategic partnerships with Apollo and SimCorp.

Earlier this year, the company entered into a non-binding memorandum of understanding with US group Apollo Global Management, to build a non-bank lending business across Australia and New Zealand.

Mr Hamilton said the company was expanding its brand to deliver more products across a great number of channels, as well as focusing on its investment capabilities.

“The joint venture opportunity with Apollo reflects the continued success of our relationship, which we have been developing over a number of months,” Mr Hamilton said.

“This opportunity would also address an underserved market, leverage the capabilities of the group and provide business diversification.”

Challenger stated both parties were working together on a range of opportunities to help customers achieve financial security in retirement and deliver “meaningful value” for their shareholders.

The companies were in discussion on a range of topics such as investment, life risk opportunities, product and distribution opportunities.

The joint venture aims to bring together Challenger’s operating platform and relationships across Australian lending markets with Apollo’s extensive global scale, whilst also providing important business diversification.

Challenger announces joint venture with SimCorp

Challenger also announced it has entered into a non-binding memorandum of understanding with investment administration service SimCorp to establish a joint venture to provide a “market-leading” investment operations platform.

The proposed joint venture, which is expected to be operational by the first half of financial year 2023, will provide investment administration as a service to Challenger, Fidante and third-party clients.

Mr Hamilton said the joint venture with SimCorp will leverage Challenger’s existing investment operations capability and deliver an end-to-end investment administration platform.

“We see an untapped opportunity to deliver these critical services to leading financial services organisations and asset owners,” Mr Hamilton said.

“Through executing our strategy, we will take a broader stance in retirement and seize the exciting opportunities ahead.”

Challenger will be a majority owner of the joint venture and will appoint Challenger’s chief operating officer David Mackaway as CEO to lead the business.

APRA approvals for bank

Since the completion of its acquisition of MyLifeMyFinance Limited, an Australia-based customer saving and loans bank, Challenger recently announced it had received approval from the Australian Prudential Regulation Authority (APRA) to commence certain types of non-retail lending, including SME, commercial real estate and corporate lending.

Challenger said this was a “significant milestone” and will provide it with the opportunity to expand its guaranteed income offering and leverage the business’ superior yield origination platform.

The fund manager also reaffirmed that it was on track to meet its full-year guidance for FY22 on account of strong balance sheet and sustainable capital settings and expects to be near the upper end of the $430 million to $480 million guidance range.

[Related: Challenger looks to launch lender]