ASX-listed Elanor Investors Group has acquired Challenger’s $3.4 billion Australian real estate funds management business for $41.8 million.
The deal will grow Elanor’s assets under management from $3.0 billion to $6.4 billion.
Elanor Chief Executive Officer, Glenn Willis, said it was a transformational transaction for the company.
“We are pleased to have executed on a key strategic objective of the Group to grow AUM through the acquisition of a significant real estate funds management platform,” Willis said.
“Combining Elanor’s real estate funds management capability with Challenger’s market leading capital raising platform delivers significant size and scale benefits, and positions us for further strong growth.”
Under the deal, Elanor will issue 27.4 million securities to Challenger as consideration for the acquisition of its real estate business, representing up to 18.2% of ENN securities on issue.
Post-transaction, Challenger will be Elanor’s largest securityholder.
The deal is subject to claw-back provisions of up to 50% over three years based on certain milestones, including minimum base funds management fee targets.
Elanor and Challenger have also entered into a strategic partnership whereby Elanor will be Challengers’ real estate funds management partner in Australia and New Zealand and Challenger’s multi-affiliate funds management business, Fidante, will exclusively distribute Elanor’s real estate managed funds.
Challenger intends to be a long-term Elanor securityholder, reflecting the strategic nature of the partnership, and will work with Elanor to support the growth of the business.
A Challenger representative will join the Elanor board.
“The combination of Challenger’s real estate platform with Elanor will provide a significant uplift in capability and scale,” Challenger Managing Director and Chief Executive Officer, Nick Hamilton said.
“Elanor’s track record in originating high quality real estate opportunities, combined with Fidante’s award winning distribution capability, will allow us to meet more customer needs. Challenger will benefit from both alignment and access to growth via the acquisition of a strategic stake in Elanor, and we are excited to continue to grow the real estate platform together with the Elanor team.”
Elanor Investors Group is a real estate investment and funds management group, focused on the commercial office, healthcare, retail and hotels, tourism and leisure sectors.
Challenger Limited is an investment management firm focused on providing customers with financial security for a better retirement.