Apollo Global Management has cut its shareholding in Challenger from 20.1 per cent to 9.9 per cent, with the aim to redeploy capital to other growth opportunities.
Ahead of the formal announcement, The Australian Financial Review’s Street Talk said Apollo was planning a partial share sale of a stake worth some $460 million.
Challenger confirmed the news in an ASX listing on Thursday, noting that Apollo had increased its equity stake in the business to 20 per cent since July 2021.
As a result of Apollo’s share reduction, MS&AD Insurance Group has become Challenger’s largest shareholder with a share of 15.1 per cent.
Despite Apollo’s sizable divestment, the investment management firm said that the pair “remain committed to pursuing a range of initiatives as part of their ongoing commercial partnership, including an asset origination and distribution partnership”.
Namely, Challenger Life will continue to have access to Apollo’s direct asset origination capabilities, which were secured under a partnership the two formed in November 2023. Through this partnership, Challenger said it has invested in Apollo’s private markets and private equity strategies.
Moreover, since September 2023, Challenger has exclusively distributed Apollo’s Aligned Alternatives (AAA) strategy to Australian retail and wholesale clients and will continue to do so, it confirmed.
“Challenger and Apollo have developed a collaborative partnership that supports our broader growth strategy,” said Challenger managing director and CEO Nick Hamilton.
“We look forward to continuing this relationship and pursuing a range of initiatives to deliver value for Challenger shareholders, including through asset origination and distribution of Apollo’s high-quality products in Australia.
“Apollo’s re-evaluation of its investment in our business will also significantly increase Challenger’s free float and improve trading liquidity.”
Similarly, Apollo’s head of Asia-Pacific, Matthew Michelini, said: “As one of our most important long-term strategic partners globally, we look forward to continuing to collaborate on asset management and product design.”
Challenger and State Street ink major deal
Also on Thursday, it was revealed that State Street Corporation has been selected by Challenger to provide custody and investment administration services through its State Street Alpha program for $127 billion in assets under management.
State Street will be the custodian and investment administrator for the entire Challenger group, comprising funds management that includes the multi-affiliate platform Fidante, fixed income platform Challenger Investment Management, and Challenger Life, the leading provider of annuity products in the Australian market.
“This partnership is very important for State Street,” said Stefan Gmuer, head of Asia-Pacific and head of Strategic Business Growth at State Street. “The mandate reaffirms our front to back proposition which brings value, scale and efficiency to our clients who are looking to accelerate their own growth and transformation.”
Under this mandate, approximately 100 Challenger employees will transfer to State Street in October.
