Slide 1: Capital Notes 4 Offer Investor Presentation
Challenger Limited Capital Notes 4 Offer (and Capital Notes 2 Reinvestment Offer) Investor Presentation 7 March 2023 Nw challenger £2
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 4) (the Offer
Slide 3: Important notice
Important notice The distribution of this presentation (including an electronic copy) outside Australia may be restricted by law. If you come into possession of this presentation outside Australia, then you should seek advice on, and observe, any such restrictions. Any failure to comply with such re
Slide 4: Agenda
Agenda 1 Offer summary 2 About the Challenger Group 3 Key features of Challenger Capital Notes 4 4 Offer process 4
Slide 5: Offer summary
Offer summary O1 challenger {3
Slide 6: Summary
Summary Offer summary Issuer • Challenger Limited (ABN 85 106 842 371) (Challenger) Instrument • Non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes (Challenger Capital Notes 4) Offer size • $250 million, with the ability to raise more or less Offer struct
Slide 7: Ranking of Challenger Capital Notes 4 in a winding-up
Challenger Capital Notes 4 Ranking of Challenger Capital Notes 4 in a winding-up ¹ Type Illustrative examples • Liabilities in Australia in relation to protected accounts (generally, savings accounts and term deposits) and other liabilities mandatorily Higher ranking Preferred and secured debt pre
Slide 8: Key features
Key features Summary of events that may affect Challenger Capital Notes 4 Issue Date Potentially Optional Exchange Dates Mandatory Conversion Date 5 April 2023 perpetual Scheduled Mandatory Conversion Each Distribution Payment Date 25 May 2029 25 August 2029 25 November 2029 25 February 2030 Date 25
Slide 9: About the Challenger Group
About the Challenger Group 02
Slide 10: Challenger Group overview
Summary Challenger Group overview • Challenger Limited (Challenger) is the non-operating holding company and ultimate parent company of the Challenger Group • Challenger is an investment management firm with a purpose to provide customers with financial security for a better retirement • Challenger
Slide 11: Corporate purpose and strategy
Corporate purpose and strategy Building a more diversified business to meet more customer needs About Challenger Group 11
Slide 12: Challenger overview
Challenger overview Providing customers with financial security for a better retirement Challenger Limited (ASX:CGF)1 Life Funds Management #1 Australian retirement One of Australia’s largest income business2 active fund managers5 Guaranteed3 retirement income products Fidante 4 APRA regulated Affil
Slide 13: Australian superannuation system
Australian superannuation system Attractive market with long-term structural drivers Market growth supported by Australian superannuation growth2,3 ($bn) 10,000 • Mandatory and increasing contributions 9,000 • Earnings and contributions compounding 8,000 • Population growth and ageing demographics 7
Slide 14: Life business
Life business Australia’s largest annuity provider1 Life business overview Total Life sales ($bn) 9.7 • Focuses on retirement spending phase of superannuation by providing products converting retirement savings into safe, secure and reliable 6.9 Challenger 4.6 income 5.6 5.2 5.5 Index Plus 4.6 2.4 L
Slide 15: Capital management
Capital management Strongly capitalised Strongly capitalised Additional financial flexibility Life PCA ratio1 Group debt facility Bank ~$100m 1.59x Nil $400m undrawn Excess capital to be returned prior to Target range completion3 1.30x to 1.70x2 About Challenger Group 1. The PCA ratio represents tot
Slide 16: Funds management
Funds management 1 One of Australia’s largest active fund managers Funds Management overview Funds Management FUM2 ($bn) • Focuses on wealth accumulation through supporting customers 106 to build savings by providing investment strategies and products 93 93 21 seeking to deliver superior investment
Slide 17: Funds management – multiple brands and strategies
Funds management – multiple 1 brands and strategies Scalable and diversified ~$93bn of FUM Affiliate brands, strategies and asset classes Australian equities Equities Global, regional $38bn1 & EM equities Sustainable investments Fixed Income $49bn1 Alternatives $6bn1 About Challenger Group 1. Funds
Slide 18: 1H23 result – strong financial performance
1H23 result1 – strong financial performance Reflects benefits of diversification and growth Life sales Group ROE Dividend $5.5bn 12.3% 12.0cps Normalised NPBT ▲11% ▲20 bps ▲4% Annuity sales +41% Life ROE 14.8% (+170bps) In-line with payout policy $250m Retail annuity sales +89% ▲5% Statutory NPAT Gr
Slide 19: Key features of Challenger Capital Notes 4
Key features of Challenger Capital Notes 4 03
Slide 20: Key features: Distributions
Key features Distributions • Distributions are discretionary, non-cumulative, floating rate payments and are scheduled to be paid quarterly in arrears on the Distribution Payment Date (subject to certain conditions) until all Challenger Capital Notes 4 are Exchanged or Written Off • Distributions ar
Slide 21: Key features: Optional Exchange and Conversion
Key features Optional Exchange and Conversion on Acquisition Event • Optional Exchange Dates: 25 May 2029, 25 August 2029, 25 November 2029 and 25 February 2030 • Challenger may choose to: − Exchange all or some Challenger Capital Notes 4 on any Optional Exchange Date; 1 Optional Exchange − Exchange
Slide 22: Key features: Mandatory Conversion
Key features Mandatory Conversion • On 25 February 2032, subject to satisfaction of the Mandatory Conversion Conditions illustrated below, Challenger Capital Notes 4 will mandatorily Convert to a variable number of Ordinary Shares with a value of approximately $101 per Challenger Capital Note 4 base
Slide 23: Key features: Non-Viability Conversion
Key features Non-Viability Conversion • A Non-Viability Trigger Event occurs where APRA determines that conversion to Ordinary Shares or write-off of Relevant Perpetual 1 Subordinated Instruments is necessary because: – without conversion or write-off APRA considers that Challenger would become non-
Slide 24: Comparison between Capital Notes 4 and other investments
Key features Comparison between Challenger Capital Notes 4 and other investments Challenger Capital Notes 22 (CCN2) and Challenger annuity Term deposit Challenger Capital Notes 4 (CCN4) Ordinary Shares Challenger Capital Notes 3 (CCN3) Bank (including Challenger Bank), Issuer Challenger Life Company
Slide 25: Key risks of investing in Capital Notes 4
Key features Key risks associated with an investment in Challenger Capital Notes 4 • Challenger Capital Notes 4 are not policy liabilities of CLC, Challenger or any other member of the Challenger Group, are not protected accounts or deposit liabilities of Challenger Bank, Challenger or any other mem
Slide 26: Offer process
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Slide 27: Offer process: Structure
Offer process Structure • All applications for Challenger Capital Notes 4 must be from: − an Institutional Investor; or Applications − a client of a Syndicate Broker who is either a Wholesale Client or a Retail Investor who has received personal advice from a qualified financial adviser concerning a
Slide 28: Reinvestment Offer
Reinvestment Offer Summary • The Reinvestment Offer is an invitation to Eligible CCN2 Holders to: – apply to Challenger to have the CCN2 Resale Proceeds relating to all or some of their Challenger Capital Notes 2 reinvested in the Challenger Capital Notes 4; and What is the Reinvestment – direct the
Slide 29: Key dates for the Offer
Offer process Key dates for the Offer Key dates for the Offer Date Lodgement of this Prospectus with ASIC 7 March 2023 Bookbuild period commences for the Syndicate Brokers to determine the Margin 7 March 2023 Announcement of the Margin and confirmation of Bookbuild allocations to the Syndicate Broke
Slide 30: Key dates for Challenger Capital Notes holders
Offer process Key dates for Challenger Capital Notes 2 holders Key dates for the Reinvestment Offer Date Record date for determining Eligible CCN2 Holders for the Reinvestment Offer (7:00pm Sydney time) 3 March 2023 Opening Date for the Reinvestment Offer 15 March 2023 Record date for the First CCN2
Slide 31: Contact directory
Offer process Contact directory Issuer Alex Bell, Chief Financial Officer +61 2 9994 7757 Challenger Limited Thomas Roxburgh, Group Treasurer +61 2 9994 7313 Mark Chen, General Manager Investor Relations +61 2 9994 7815 Joint Lead managers Paul Neumann +61 2 9324 3635 UBS AG, Australia Branch Dom Kr
Slide 32: challenger
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