Challenger Ltd (ASX:CGF) has announced the sale of its 25 percent equity interest in Kapstream Capital to US based global investment firm Janus Capital Group for $45million. The sale provides an opportunity for Challenger and Kapstream to further develop their multi-boutique funds management business known as Fidante Partners.
Challenger’s business focus is investment management to provide Australians with financial security in retirement. As of 31 March 2015, the company had $60.4 billion dollars in assets under management. The company operates in two investment businesses, a fiduciary fund management division and an APRA-regulated Life division. Challenger Life is currently Australia’s largest provider of annuities. Fidante Partners, a division of Challenger Ltd, provides integrated services to boutique funds management businesses, allowing them to focus more on investing and managing businesses. Fidante Partners are currently responsible for AU$45.1 billion of funds under management.
Challengers’ CEO, Brian Benari, said “We are not naturally a seller of our boutique funds management equity interests but this transaction provides unique opportunities to develop Kapstream’s and Fidante Partner’s businesses.”
The sale will produce a $40million dollar pre-tax profit for Challenger which will be realised in financial year 2016. As a result of the sale, Fidante Partners will no longer receive equity distributions from Kapstream however they will continue to receive administration and distribution fees. There is not expected to be a significant change to Findate’s revenue.
The outlook for Challenger appears favourable as the market views the sale in a positive light. Challengers share price has gained over 6 percent in the last two days and is currently trading at $6.90. The last couple of years have generally been positive as Challenger has seen significant growth. Late last year the company experienced a period of negative sentiment, however its price has since stabilised as it has re-joined its long term ascending channel. Wise-Owl has provided its clients with reports on Challenger to provide clarity on recent events and discuss what the future may hold.
Author: Ben Visser
Jul 02, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.