Challenger shares slide as largest shareholder Apollo halves stake
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More news: Challenger shares tumbled after its largest shareholder Apollo Global Management more than halved its stake in the Sydney-based investment group.
Challenger shares fell 10.7% to $6.25 by 12:25pm AEST.
Apollo Global Management halves stake in Challenger
The news: Challenger's largest shareholder Apollo Global Management has more than halved its stake in the Sydney-based investment group to support "redeployment of capital to other growth opportunities".
The numbers: NYSE-listed asset manager Apollo reduced its shareholding in Challenger from 20.1% to 9.9%. Since July 2021, the US group has increased its equity stake in Challenger to 20%, as the two businesses built a strategic financial services partnership.
Japan's MS&AD Insurance Group will become Challenger's largest shareholder, with a 15.1% stake. MS&AD recently extended the agreement between Challenger subsidiary Challenger Life and its subsidiary Mitsui Sumitomo Primary Life Insurance Group for five years in May.
The context: Challenger and Apollo said they remain committed to "pursuing a range of initiatives" as part of their ongoing commercial partnership, including an asset origination and distribution partnership.
Under an asset origination partnership formed in November 2023, Challenger Life — Australia's largest provider of annuities — has access to Apollo's direct asset origination capabilities, which helps support customer annuity rates and returns for Challenger shareholders.
Through this partnership, Challenger has invested in Apollo's private markets and private equity strategies. Since September 2023, Challenger has exclusively distributed Apollo's "aligned alternatives" strategy to Australian retail and wholesale clients.
The companies confirmed that these strategic initiatives will continue and are not subject to Apollo's shareholding in Challenger.
What they said: "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," said Challenger managing director and CEO Nick Hamilton.
"Apollo's re-evaluation of its investment in our business will also significantly increase Challenger's free float and improve trading liquidity," Hamilton said.
Apollo's head of Asia Pacific Matthew Michelini said: "We believe Challenger is a unique platform to offer the next generation of investment products to retirees in Australia."
"As one of our most important long-term strategic partners globally, we look forward to continuing to collaborate on asset management and product design," he said.
The source: ASX announcement
