SYDNEY, AUSTRALIA: Elanor Investors Group (ASX:ENN) has agreed to acquire 100% of and Challenger Limited (ASX:CGF) $3.4 billion Australian real estate funds management business (CRE) for a maximum consideration of $41.8 million, and establish a broader strategic partnership between Elanor and Challenger.
Elanor will issue 27.4 million securities to Challenger as consideration for the acquisition of CRE, representing up to 18.2% of ENN securities on issue. The consideration 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 Investors Group and Challenger Limited also entered into a strategic partnership whereby Elanor will be Challengers’ real estate funds management partner in Australia and New Zealand and Fidante (Challenger’s multi-affiliate funds management business) will exclusively distribute Elanor’s real estate managed funds.
The acquisition delivers a step-change in size and scale for Elanor, increasing AUM from $3.0 billion to $6.4 billion, with the strategic partnership positioning Elanor for further strong growth.
Elanor Chief Executive Officer, Glenn Willis, said: “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. This is a transformational transaction for Elanor. 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.”
Challenger Managing Director and Chief Executive Officer, Nick Hamilton said: “The combination of Challenger’s real estate platform with Elanor will provide a significant uplift in capability and scale. 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 will acquire 100% of Challenger’s real estate funds management business for an upfront consideration of $41.8 million. The Consideration is subject to claw-back provisions (of up to 50% over three years) based on certain milestones, including minimum base funds management fee targets.
Post-transaction, Challenger will be Elanor’s largest securityholder with an 18.2% holding. 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 transaction is expected to complete on 30 June 2023.
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