Challenger Forms Strategic Real Estate Partnership with Elanor Investors Group

Highlights:

• Challenger Limited has entered into partnership with Elanor Investors Group.
• Elanor will become Challenger's commercial real estate partner in Australia and New Zealand, while Challenger became Elanor's exclusive distribution partner.
• The partnership agreement supports Challenger's strategy to expand its funds management offering.

Challenger Limited, (ASX: CGF) an ASX-listed investment management firm, has entered into a strategic partnership agreement with Elanor Investors Group (ASX: ENN) to form a real estate partnership. The deal involves Elanor becoming Challenger's commercial real estate partner in Australia and New Zealand, while Challenger becomes Elanor's exclusive distribution partner. As part of the agreement, Challenger will sell its Australian real estate business to Elanor for a total consideration of AU$ 42 million, which will be received in new securities issued by Elanor. Upon completion, Challenger's holding in Elanor will be around 18% of the total securities on issue. The transaction involves new investment management agreements between Challenger Life and CRE third-party clients with Elanor, representing approximately AU$ 3.4 billion of funds under management invested across retail, office, and industrial assets.

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Strategic Partnership to Expand Funds Management Offering

• The partnership agreement supports Challenger's strategy to expand its funds management offering by combining Fidante's market-leading distribution capability with Elanor's real estate platform to create a new Fidante affiliate manager.
• The new affiliate manager will offer a compelling proposition for retail, high-net-worth, and institutional customers.
• Elanor will also become Challenger's commercial real estate partner in Australia and New Zealand, while Challenger's multi-affiliate business, Fidante, will distribute Elanor's existing and new funds.
• The strategic partnership highlights Challenger's intention to be a long-term Elanor securityholder and work with management to support the growth of the business, including having a Challenger representative join the Elanor Board.

Key Transaction Details

The purchase price for the transaction is AU$ 42 million, with consideration subject to claw-back provisions over a three-year period linked to achieving certain milestones. The consideration will be received in new securities issued by Elanor, with securities issued on completion. The Elanor securities will be issued at AU$ 1.52, being the 30-day VWAP reduced by the pro-rata estimated Elanor distribution for the six months ended 30 June 2023.

Challenger's interest in Elanor post-transaction completion will be equivalent to approximately 18% of the total securities on issue. The transaction is subject to Elanor securityholder approval and other regulatory approvals and is expected to complete by 30 June 2023. The transaction is expected to be EPS neutral for Challenger in the first year after completion.

Comments from the CEOs

Challenger Managing Director and Chief Executive Officer, Nick Hamilton, said, "The combination of Challenger's real estate platform with Elanor will provide a significant uplift in capability and scale." He added, "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."

Elanor Chief Executive, Glenn Willis, said, "We are pleased to have executed on a key strategic objective of the Group to grow AUM through the acquisition of a significant real estate funds management platform. This is a transformational transaction for Elanor." He added, "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."

Conclusion

The strategic partnership between Challenger and Elanor will expand Challenger's funds management offering and provide Elanor with a significant real estate funds management platform. The partnership will offer a compelling proposition for retail, high-net-worth, and institutional customers, and highlights Challenger's intention to be a long-term Elanor securityholder and support the growth of the business. The transaction is expected to complete by 30 June 2023, subject to regulatory approvals.

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