Challenger IM raises $350m for listed credit structure

Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.

In August, Challenger IM announced its intention to launch the Challenger IM LiFTS 1 Notes on the ASX. LiFTS stands for Listed Floating Rate Term Securities, a listed note to sit outside of bank hybrids and provide a defensive alternative to listed investment trusts.

Providing monthly interest payments, the offering will operate as a fixed-term investment, with the underlying portfolio expected to comprise of more than 100 credit exposures across private and public markets.

This seeks to broaden access to income-generating investments for advisers and retail investors who are seeking capital stability while expanding Challenger’s presence in the listed debt market. 

Since announcing the launch, Challenger said it has seen “overwhelming interest” for the product and raised $350 million during the fundraising period, listing on the ASX on 11 September. It had previously secured $100 million from cornerstone investors. 

Challenger chief executive of funds management, Victor Rodriguez, said: “The launch is aligned with Challenger’s long-term growth plans and commitment to investment excellence.

“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 were pleased with the overwhelming interest we received during the offer period and closed at the maximum raise amount of $350 million, demonstrating strong market appetite for this product.”

Executive general of corporate and superannuation trustee services at Equity Trustees, Andrew Godfrey, said: “We are proud to support Challenger in introducing this new listed structure, which expands investor access to diversified credit opportunities.”

In its financial year results in August, the firm said its funds management business generated a 41 per cent increase in normalised NPAT, up to $53 million. This was driven by higher net fee income from placement and performance fees and initiatives to structurally change the expense base.

However, net outflows of $11.6 billion, mainly from institutional investors, saw funds under management drop to $112.8 billion for Challenger’s funds management business. The net outflows included $10.7 billion in institutional net outflows and $0.7 billion in retail net outflows, across predominantly fixed income and equity strategies.