Retirement income specialist Challenger Ltd has announced plans to establish a non-bank lending business in a joint venture with its new US shareholder, alternative asset manager Apollo Global Management.
Apollo and a strategic partner, US asset manager Athene, started building a stake in Challenger in the middle of last year. In December they received approval from APRA to acquire a 15 per cent shareholding in Challenger, taking their stake to 18 per cent.
Last month, Apollo and Athene completed a merger.
Challenger announced yesterday that it has entered into a non-binding memorandum of understanding with Apollo, with the intention of establishing a joint venture to “build a leading non-bank lending business in Australia and New Zealand”.
Challenger said the initiative was aimed at enhancing its retirement services offering, which would probably involve funding the lending business through income-generating managed funds.
This is Challenger’s second move into the banking/lending market in the past couple of years. In December 2020, it announced a $35 million deal to acquire authorised deposit-taking institution MyLifeMyFinance from MyLifeMyMoney Superannuation Fund (formerly Catholic Super).
The acquisition was completed in the second half of last year. Challenger said its interest in owning an ADI licence is in being able to compete in the term deposit market – a significant asset class for Australian retirees.
Term deposits would complement Challenger’s existing term annuity offerings, which are sold by its life company.