- Challenger (CGF) is set to acquire Catholic Super’s subsidiary, MyLife MyFinance (MLMF), for $35 million
- MLMF is an Australian customer savings and loan bank which will give Challenger the opportunity to expand its customer base and secure retirement income offering
- The ASX 200-lister will aim to expand MLMF’s term deposit offering to support its customers’ retirement incomes and attract new customers
- The acquisition is expected to settle in March next year, but will first need approval from Australian Prudential Regulation Authority (APRA) and the Federal Treasurer
- Once completed, Challenger will hold an APRA authorised deposit-taking institution (ADI) licence – giving it access to Australia’s $1 trillion term deposit market
- Challenger is up 3.61 per cent and trading at $6.02
Challenger (CGF) has announced its plans to buy Australian customer savings and loan bank, MyLife MyFinance (MLMF), for $35 million.
The investment management firm will acquire MLMF through an agreement with MyLife My Money Superannuation Fund, also known as Catholic Super.
Catholic Super acquired MLMF in 2016 and has seen its savings portfolio increase by a compound annual growth rate of 24 per cent.
Challenger considers the buy to be an opportunity to expand its customer base and secure retirement income offering. Initially, it will focus on expanding MLMF’s term deposit offering by applying the same investment strategy used to support its term annuity business.
“Term deposits represent a significant asset class for Australian retirees and entering the market provides an opportunity to play a greater role supporting the retirement incomes of our customers, while also attracting a new cohort of customers,” Managing Director and CEO Richard Howes said.
Following the acquisition, Challenger will hold an Australian Prudential Regulation Authority (APRA) authorised deposit-taking institution (ADI) licence. This gives it access to Australia’s $1 trillion term deposit market.
“Challenger has spent considerable time over the past two years investigating the requirements of an ADI licence to complement our existing businesses. This acquisition will enable us to accelerate this strategic initiative and access Australia’s term deposit market,” Richard added.
The $35 million acquisition price and capital requirements will be funded by a $100 million distribution from Challenger Life Company during the March 2021 quarter.
The acquisition is expected to be settled in March next year, but will first need approval from APRA and the Federal Treasurer.
Pleasingly, Challenger expects the acquisition will reduce its FY21 normalised net profit before tax by around $3 million and believes it will be within its guidance of between $390 million and $440 million.
Challenger is up 3.61 per cent and trading at $6.02 at 2:39 pm AEDT.