Challenger Limited has announced its intention to offer a new subordinated, unsecured, perpetual convertible security (Challenger Capital Notes 4) to raise approximately $250 million.
The new capital notes — to be quoted on the ASX under the code “CGFPD” — would be used to fund a subscription for additional Tier 1 Capital for the group’s insurance subsidiary, Challenger Life.
UBS AG, Australia Branch (UBS), National Australia Bank Limited (NAB), and Westpac Institutional Bank have been appointed as joint lead managers, with LGT Crestone Wealth Management and JBWere Limited to serve as co-managers.
The Challenger Capital Notes 4 are only available to eligible investors, with no separate offer made to Challenger securityholders or the equity investors more broadly.
Moreover, Challenger Capital Notes 2 cannot directly apply for Challenger Capital Notes 4.
To be eligible for Challenger Capital Notes 4, investors must:
- be a company or an individual over 18 years of age with a registered address in Australia; and
- be either an institutional investor; or a wholesale or retail client of a syndicate broker (arranger, lead manager, or co-manager) who has previously received personal advice from a qualified financial adviser concerning an investment in Challenger Capital Notes 4.
All applications must be submitted through a syndicate broker.
The launch of the capital raise comes less than a month after Challenger posted a 56 per cent fall in statutory net profit after tax (NPAT) to $123 million for the first half of the 2023 financial year.
The underlying result was impacted by negative investment experience of $42 million after tax over the half year off the back of market volatility.
Total life sales rose 11 per cent to $5.5 billion, with earnings before interest and tax (EBIT) increasing 13 per cent to $263 million.
Funds management EBIT fell 32 per cent to $31 million, while group assets under management totalled $99 billion, down 14 per cent on the prior corresponding period.
