Dai-ichi Life’s Australian subsidiary – TAL Dai-ichi Life Australia – has acquired a 15.1 per cent minority stake in Challenger from MS&AD Insurance Group at a price of 763 yen, or some $8.46, per share.
According to a statement from Challenger on Monday, the purchase price marks a premium of 53 per cent of its closing price on Friday.
While the share sale is subject to customary regulatory approvals, including from the Australian Foreign Investment Review Board (FIRB) and the Australian Prudential Regulation Authority (APRA), Challenger’s managing director and chief executive, Nick Hamilton, welcomed Dai-ichi Life’s investment.
“Dai-ichi Life is a global leader in life insurance and we look forward to building a relationship that will benefit both our customers and shareholders,” Hamilton said.
“We welcome their significant investment in our business and will explore future opportunities that support our strategic objectives.
“This is an exciting time for Challenger as we deliver our growth strategy and provide financial confidence to even more Australians in retirement.”
Last year, Challenger and Mitsui Sumitomo Primary Life Insurance Company Limited (MS Primary), a subsidiary of MS&AD, renewed their reinsurance partnership for a further five years.
Challenger noted that they have successfully collaborated with MS Primary over the last decade, confirming that the partnership will not be impacted by the share sale.
“The strategic reinsurance relationship in place with MS Primary since 2016 has created significant shared value and we are pleased this will continue,” Hamilton added.
Following the completion of the sale of MS&AD’s equity holding, Masahiko Kobayashi will step down as MS&AD’s representative on the Challenger’s board.
Also commenting on the investment, TAL said its shareholding in Challenger highlights its commitment to the growing retirement sector as the needs of Australia’s ageing population evolve.
“There is an important community need to address with 5 million Australians currently in or preparing for retirement,” TAL’s chief executive, Fiona Macgregor, said.
“Our minority investment in Challenger is an extension of our commitment to supporting Australians’ financial needs during retirement.”
Last year, Apollo Global Management 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.
Despite Apollo’s sizeable 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”.
As a result of Apollo’s share reduction, MS&AD Insurance Group had become Challenger’s largest shareholder.
