Challenger’s strategic private credit play

The company, which recently welcomed major insurer TAL and its owner Dai-Ichi Life, as significant shareholders, said the new listed product would provide Australian investors with a fixed term investment paying monthly interest payments which will be paid by proceeds from a managed and diversified portfolio of credit exposures.

The company announcement said that the launched marks a significant step in Challenger’s strategy to broaden access to income-generating investments and expand its presence in the listed debt market.

“It also signals the start of a new issuance program, designed to meet growing demand for private credit exposure in a more accessible format,” it said.

Challenger Funds Management chief executive, Victor Rodriguez described the move as a strategic milestone for the company building on builds on 20 years of experience investing in public and private credit.

“With the growing demand for private credit, Challenger IM LiFTS aims to provide access to this asset class via an ASX-listed fixed term debt security. We have secured cornerstone commitments of $100 million in under 24 hours from its opening demonstrating strong market appetite for this product,” he said.

According to the company, Challenger IM LiFTS offers a fixed term of seven years (with a target repayment date on the sixth anniversary of issue), monthly interest payments (deferrable in certain circumstances) and daily liquidity via the ASX.

The interest rate payable is 1M BBSW + 2.75% per annum and includes a first loss buffer, designed to provide additional credit enhancement to noteholders. The underlying portfolio is expected to comprise of more than 100 credit exposures across private and public markets, with limits on individual positions and industry concentrations to support diversification.