Challenger's boutique funds management business, Fidante Partners, has acquired UK-based alternative investments group Dexion Capital for $41 million.
London-based Dexion Capital Group comprises interests in three specialist fund managers as well as an investments distribution business.
Dexion Capital has strategic interests in renewable energy specialist Resonance Asset Management Limited; UK social-housing investor Horizon Infrastructure Partnership Limited; and, Agricultural Asset Management Limited, which is focused on agricultural investments in the US and UK.
Dexion Capital also manages London-listed alternative asset fund Dexion Absolute Limited. The business employs approximately 40 staff, predominantly located in London.
Challenger chief executive for funds management Ian Saines said the acquisition represents a "significant step up" in the company's European presence.
"Dexion Capital’s funds management operation provides a scalable platform to realise our ambition of replicating Fidante Partners’ successful multi-boutique model in the European market, while opening up global distribution opportunities for our existing boutique managers.
“[Dexion] provides us with a large established distribution channel to UK and European investors and, in addition, has been evolving into a multi-boutique manager much like Fidante Partners, taking long-term interests in asset managers and supporting them with distribution and operational services," Mr Saines said.
Challenger will make an agreed fixed payment of £19.6 million (A$41 million) to Dexion’s shareholders. The final acquisition price is dependent on profitability over a period of up to six years, under earn-out arrangements with key Dexion executives.
The acquisition is immediately earnings accretive and is expected to meet Challenger’s 18 per cent pre-tax return on equity target.