Challenger extends capabilities via Apollo

Challenger Limited has moved to strengthen its retirement incomes product capability via an expansion of its relationship with US-based global asset manager, Apollo which owns specialist retirement services business, Athene.

The importance of the expanded relationship is reflected in the fact that Apollo will take up a 15% stake in Challenger and now have representation on the board.

The relationship also reflects Challenger’s focus on the direction of Australian Government policy, particularly the pressure being imposed on superannuation fund trustees because of the requirements of the Retirement Income Covenant.

According to the Challenger announcement to the Australian Securities Exchange (ASX) the origination partnership will provide Challenger Life with access to Apollo’s direct asset origination capability and strengthen Challenger’s access to original flows.

The ASX announcement noted that last year Apollo directly originated approximately US$100 billion of assets, primarily senior, secured lending opportunities.

“The partnership allows Challenger access to origination flows, co-investment opportunities and new investment strategies,” it said.

“The expanded strategic relationship builds on the existing collaboration between both businesses, which includes a distribution agreement to bring Apollo’s Aligned Alternatives strategy to the Australian market and a joint venture to build a non-bank lending platform in Australia and New Zealand.”

The announcement said that Apollo’s seat on the Challenger board was subject to conditions, including a minimum shareholding requirement of 15% of issued capital and restrictions on acquiring further shares, subject to certain exceptions.

The ASX announcement noted that Athene is a leading retirement services company and “the number one provider of fixed annuities in the US in 2022”.