Challenger announces agreement to sell Challenger Bank

Market Announcement

Challenger announces agreement to sell Challenger Bank

20 Oct, 2022

Challenger Limited (ASX:CGF) today announced it has signed a share sale agreement with Heartland Group Holdings Limited (NZX/ASX:HGH) (Heartland) to sell Challenger Bank Limited (Bank) for consideration of approximately $36 million1.

The sale of the Bank follows the completion of a strategic review announced in August 2022, which concluded a sale was the best option for Challenger.

Key transaction details:

  • Cash sale of the Bank to Heartland for approximately $36 million2;
  • Purchase price is approximately $11 million in excess of the Bank’s net assets (approximately $25 million)3;
  • Excess capital of approximately $100 million is expected to be returned to Challenger prior to completion, subject to APRA approval; and
  • Completion is subject to regulatory approvals in Australia and New Zealand.

Challenger Chief Executive, Nick Hamilton, said: “We have conducted extensive analysis and considered the future strategic value of the Bank and its ability to contribute to Challenger’s purpose of providing our customers with financial security for a better retirement.

“The sale will allow us to focus on our Life and Funds Management businesses and leverage the scale we can achieve through strategic partnerships.

“The Bank will now be positioned for long term success under Heartland’s ownership and will benefit both the Bank’s employees and its customers.”

1 Price subject to completion adjustments and based on a net asset value of approximately $25m.
2 Challenger acquired Challenger Bank Limited (formerly MyLifeMyFinance Limited) for $35m.
3 Any difference between purchase price and net assets will be reduced by transaction costs and other costs associated with the sale and will be reported as a significant item on completion.