Challenger Limited · ASX:CGF
Challenger — Debt Investor Presentation (February 2017)
26 slides from Challenger's debt investor presentation, Feb 28, 2017
Slide 1: Challenger Capital Notes 2 Offer
For personal use only Challenger Limited Challenger Capital Notes 2 Offer 28 February 2017
Slide 2: Important Notice
Important Notice This presentation has been prepared and authorised by Challenger Limited (ABN 85 106 842 371) (“Challenger”) in relation to its proposed offer of non-cumulative, convertible, transferrable, redeemable, subordinated, perpetual and unsecured notes (“Challenger Capital Notes 2” or “Not
Slide 3: Outline
Outline For personal use only Section 1 Offer summary Section 2 About Challenger Section 3 Key features of Challenger Capital Notes 2 Section 4 Offer process 3
Slide 4: Offer summary
For personal use only Section 1 Offer summary
Slide 5: Summary: Group Overview
Summary Group Overview For personal use only • Challenger Limited ("Challenger") is the non-operating holding company and ultimate parent company of the Challenger Group • Challenger is an ASX100 listed company (under the code CGF) with a $6.8 billion market 1 capitalisation • The group operates two
Slide 6: Offer summary
Summary Offer summary For personal use only Issuer • Challenger Limited (Challenger) Offer • Fully paid, subordinated, perpetual, unsecured, convertible notes ("Notes") Offer size • $350 million with the ability to raise more or less Purpose • To fund the regulatory capital requirements of Challenge
Slide 7: About Challenger
For personal use only Section 2 About Challenger
Slide 8: About Challenger: Business overview
About Challenger Business overview For personal use only Challenger Limited (ASX: CGF) • Non-operating holding company and ultimate parent company of the Challenger Group 1 • ASX100 listed company (under the code CGF) with $6.8 billion market capitalisation 2 • Over 630 employees and $2.8 billion in
Slide 9: Australia's superannuation system
Australia’s superannuation system Attractive market with long term structural growth drivers For personal use only Two phases of superannuation Projected superannuation assets 2017 – 2035 ($bn) 2 10,000 Accumulation phase Retirement phase Super ‘savings’ Super ‘spending’ Funds Management Life 8,000
Slide 10: Life business (Challenger Life Company)
About Challenger Life business (Challenger Life Company) For personal use only Overview Life annuity sales ($bn) • Annuity and guaranteed retirement income products distributed to 3.4 retail and industry superannuation members 2.8 2.8 • Products are distributed to retail customers through financial
Slide 11: Funds Management business
About Challenger Funds Management business For personal use only Overview FUM ($bn) • Funds Management comprises 62 58 57 ‒ Fidante Partners; and 47 ‒ Challenger Investment Partners 41 • Funds Under Management (FUM) of $62.1bn1 31 ‒ over the last 5 years (since 31 December 2011) FUM 2.8 2.8 has incr
Slide 12: 1H17 operating performance
About Challenger 1 1H17 operating performance For personal use only • Annuity sales up 34% to $2.2bn • Life EBIT up 7% to $267m Life • Life net book growth of 7.8% • CLC $0.8bn of excess regulatory capital 2 • AUM up 11% to $14.6bn • CLC PCA ratio of 1.39 times Funds • Net flows of $3.2bn • Normalis
Slide 13: Capital management
About Challenger Capital management For personal use only Strongly capitalised CLC pro forma regulatory capital ($m) • Challenger Life Company (CLC) regulated 2.0 by APRA 1.56x 1.5 1.39x • CLC capital position at 31 December 2016 – total regulatory capital of $2.8bn 1.0 – $0.8bn excess regulatory ca
Slide 14: Key features of Notes
For personal use only Section 3 Key features of Notes
Slide 15: Key features: Distributions
Key features Distributions For personal use only • Distributions are floating rate, discretionary, non-cumulative payments Distributions are expected to be paid quarterly in arrears, subject to no Payment Condition existing the first Distribution Payment Date is 22 August 2017. This first Distri
Slide 16: Summary of events that may affect the Notes
Key features Summary of events that may affect the Notes For personal use only Issue Date Potentially Optional Exchange Date Mandatory Conversion Date 7 April 2017 perpetual Each Distribution Payment Date 22 May 2023 22 May 2025 after 22 May 2025 If Conversion does not occur on 22 If the Mandatory C
Slide 17: Optional Exchange and Conversion on Acquisition Event
Key features Optional Exchange and Conversion on Acquisition Event For personal use only Exchange • Challenger may choose to Exchange all or some Notes on 22 May 2023 by • Challenger may choose to Exchange all or some Notes after a Tax Event or a Regulatory Event 1 Challenger • Challenger may choose
Slide 18: Mandatory Conversion
Key features Mandatory Conversion For personal use only • On 22 May 2025, subject to satisfaction of the Mandatory Conversion Conditions illustrated below, Notes will Mandatorily Convert to a variable number of Ordinary Shares at a 1% discount to the 20 Business Day VWAP1, unless previously Converte
Slide 19: Non-viability conversion
Key features Non-viability conversion For personal use only • A Non-Viability Trigger Event (NVTE) occurs where APRA determines that conversion to Ordinary Shares or write-off of Relevant Perpetual Subordinated Instruments1 is necessary because: – without conversion or write-off APRA considers that
Slide 20: Ranking of Notes in a winding-up
Notes Ranking of Notes in a winding-up For personal use only Type Illustrative examples¹ High • Liabilities preferred by law including • Preferred and secured debt ranking employee entitlements and secured creditors • Unsubordinated and unsecured debt • Bonds and notes, trade and general creditors •
Slide 21: Comparison between Notes and other investments / securities
Key features Comparison between Notes and other investments / securities For personal use only Challenger annuity Term deposit Challenger Capital Notes 1 Challenger Capital Notes 2 Ordinary shares Bank, credit union or Issuer CLC Challenger Challenger Challenger building society Policy (unsecured, u
Slide 22: Key risks associated with an investment in Notes
Key features Key risks associated with an investment in Notes For personal use only • Notes are not policy liabilities of CLC, Challenger or any other member of the Challenger Group, are not secured over the assets of Challenger or any member of the Challenger Group, and are not guaranteed or insure
Slide 23: Offer process
For personal use only Section 4 Offer process
Slide 24: Offer process: Structure
Offer process Structure For personal use only Institutional • Offer to certain institutional investors Offer Broker Firm • Offer to Australian resident retail and high net worth clients of Syndicate Brokers Offer • Offer to Eligible Securityholders ‒ registered holders of Ordinary Shares or register
Slide 25: Offer process: Key dates
Offer process Key dates For personal use only Event Date¹ Record date for determining Eligible Securityholders 23 February 2017 Lodgement of original Prospectus with ASIC 28 February 2017 Bookbuild to determine the Margin 7 March 2017 Announcement of the Margin 8 March 2017 Lodgement of the replacem
Slide 26: Contact directory
Offer process Contact directory For personal use only Issuer Andrew Tobin Chief Financial Officer +61 2 9994 7000 Challenger Limited Gavin Buchanan Deputy Chief Financial Officer & +61 2 9994 7482 Group Treasurer Structuring Adviser & Joint Lead Manager Andrew Buchanan +61 2 9324 2617 UBS Enrico Mus
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