This article is from the Australian Property Journal archive
ASX-listed property fund manager Elanor Investors Group has struck a “transformational” deal with Challenger to manage the financial services company’s $3.4 billion Australian real estate funds management business.
Elanor’s funds under management will more than double from $3.0 billion to $6.4 billion and its fee revenue from funds management will surge by 60%.
Elanor will pay $41.8 million deal to manage Challenger’s $3.4 billion portfolio of retail, office and industrial assets, while Challenger will take on an 18.2% stake in Elanor, becoming its largest securityholder and giving it a seat on the board.
That is to subject 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 in which Elanor will be Challenger’s 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.
“This is a transformational transaction for Elanor,” said the group’s CEO, Glenn Willis.
“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. 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.”
Elanor’s stock jumped by more than 15%, 25c, to $1.73 in early morning trading on the news.
Challenger managing director and CEO, 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.”
Securities issued to Challenger will not be entitled to Elanor’s second-half distribution.
