Challenger to corporatise following healthy profits

Challenger Financial Servicesis actively moving towards corporatisation, using the release of its annual results this week to reveal that it has already appointed advisers.

The Board announcement suggested that the corporatisation “might better facilitate the growth of the Challenger Group” and said thatUBShad been appointed together with leading law firm, Gilbert and Tobin to advise on the issue.

The announcement came on the back of Challenger announcing a $21.3 million profit — up 146 per cent on the previous year.

However the announcement put no definitive time-frame on the corporatisation move, simply saying an announcement would be made if a decision was made to proceed.

The corporatisation strategy will be reasonably complex, requiring the concurrence of CPH Management Limited and agreement to compensation for CPH Management foregoing its right to receive performance and management fees.

“Compensation arrangements are being discussed and if corporatisation is to proceed, will require the approval of Challenger’s unit-holders, excluding CPH Management and its associates,” the Challenger Board announcement said.

Challenger’s corporatisation announcement came at the same time as it confirmed it had entered into a Strategic Alliance Agreement with Orion Asset Management Limited — the boutique launched early this year by ex-Credit Suisse Asset Management head of equities, Tim Ryan.

The agreement provides for a co-branded Challenger and Orion Wholesale Australian Share Fund in which Orion is to provide funds management expertise through an investment management agreement. Challenger will be responsible for the marketing and distribution of the product.

As part of the agreement, Challenger will provide initial seed funding for the new fund.