Challenger to enter term deposit market via ADI acquisition

Challenger has taken a significant step in terms of expanding into the term deposit market and therefore expanding its retirement income offering via the acquisition of MyLIfeMyFinance Limited from Catholic Super (now known as MyLifeMyMoney Suprannuation Fund). 

Challenger announced the transaction to the Australian Securities Exchange (ASX) today declaring that the acquisition would see it holding an authorised deposit-taking institution license. 

“The acquisition is highly strategic and provides Challenger the opportunity to significantly expand its secure retirement income offering,” the announcement said. “Following the acquisition, Challenger will hold an Australian Prudential Regulation Authority (APRA) authorised deposit-taking institution (ADI) licence, providing access to Australia’s $1 trillion term deposit market.” 

The announcement said Challenger would initially focus on expanding MLMF’s term deposit offering by replicating the investment strategy used to support Challenger’s term annuity business. 

It said that the acquisition would provide Challenger with access to a wider range of customers through multiple distribution channels, including direct and via intermediated channels. 

“Challenger has a strong track record in the term annuity market with the acquisition providing a platform to leverage Challenger’s investment capability, including its competitive advantage in private lending markets to drive additional growth via an ADI capability,” it said. 

Commenting on the transaction, Challenger’s Managing Director and Chief Executive Officer, Richard Howes said: “Adding a digital domestic banking capability to sit alongside our existing Life and Funds Management operations will further broaden the ways in which we provide financial security for retirement and will further diversify our distribution channels.  

“Term deposits represent a significant asset class for Australian retirees and entering the market provides an opportunity to play a greater role supporting the retirement incomes of our customers, while also attracting a new cohort of customers.” 

“Authorised deposit-taking institutions have had great success in attracting government guaranteed retail deposits. We see a significant opportunity to leverage our leading retirement income position and capability to manufacture guaranteed returns for our customers,” he said. 

“Challenger has spent considerable time over the past two years investigating the requirements of an ADI licence to complement our existing businesses. This acquisition will enable us to accelerate this strategic initiative and access Australia’s term deposit market.”