The Challenger Ltd (ASX: CGF) share price is up more than 12% after announcing a new major shareholder has bought a sizeable stake.
Athene buys a 15% stake in Challenger
Athene is a leading retirement services company. The business, along with strategic partner Apollo Global Management have agreed to buy a 15% interest in Challenger. When combined with other Challenger shares acquired by Athene and Apollo, they will own a combined 18% for A$720 million.
Apollo and Athene plan to merge, combined the two companies to create a large global solutions for providing investment returns and retirement income. They said entering the Australian market is a natural extension of that vision.
Athene and Apollo see an attractive long-term opportunity by partnering with and supporting Challenger’s continued growth.
Athene CEO Jim Belardi said:
“Investing in Challenger represents an exciting opportunity for us to support a well-established platform within the Australian market, a geography we have been studying given the current economic conditions and compelling demographic fundamentals.
“In many ways, Challenger is the perfect partner for us – the company is led by an experienced management team, has a strong market position, attractive growth prospects and shares our deep commitment to retirees. Together, we believe we can help Challenger continue to build long-term value, similar to what we’ve been able to achieve in building Athene’s business in the US and supporting the growth of our sister company Athora in Europe, where we are also minority shareholders.”
Management comments
Challenger Managing Director and CEO Richard Howes said:
“Today’s announcement by Athene is a strong endorsement of Challenger’s market position and long-term growth prospects from a leading international retirement services provider. We look forward to working with Athene and Apollo as we continue to pursue our shared purpose of providing customers financial security for a better retirement.”
Summary thoughts on Challenger and the share price
Challenger shares have been recovering since the start of May 2021, but today’s announcement is a useful boost.
The company is exposed to the long-term tailwinds of superannuation and the ageing population, however I don’t know if that will translate into strong profit growth for the business over time. I’m happy to watch from the sidelines because of that.
There are ASX dividend shares that could be interesting ideas, which don’t have such large or complicated balance sheets.
