Challenger Limited · ASX:CGF
Challenger — Investor Presentation (October 2020)
31 slides from Challenger's investor presentation, Oct 13, 2020
Slide 1: Challenger Capital Notes 3 Offer and Repurchase Invitation
Challenger Limited Challenger Capital Notes 3 Offer and Repurchase Invitation Investor Presentation 13 October 2020
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 3’) (the ‘
Slide 3: Offer summary
Offer summary O1 A challenger {2
Slide 4: Summary: 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 vision to provide its customers with financial security for retirement • Challenger is a
Slide 5: Summary: Offer summary
Summary Offer summary Issuer • Challenger Limited (ABN 85 106 842 371) (‘Challenger’) Offer • Non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes (‘Challenger Capital Notes 3’) Offer size • $250 million, with the ability to raise more or less • To fund the
Slide 6: About the Challenger Group
About the Challenger Group 02
Slide 7: Vision and strategy
Vision and strategy A clear plan for sustainable long-term growth About Challenger Group 7
Slide 8: About the Challenger Group
About the Challenger Group Business overview Challenger Limited (ASX:CGF) Life Funds Management #1 market share in annuities1 One of Australia’s largest active fund managers2 Leading provider of annuities and guaranteed Fidante Partners retirement income solutions in Australia. Co-owned, separately
Slide 9: Australian superannuation system
Australian superannuation system Attractive market with long-term structural drivers Market growth supported by 2 Australian superannuation growth ($bn) 8,000 • Mandatory and increasing contributions • Earnings and contributions compounding 6,000 • Population growth and ageing demographics 4,000 Res
Slide 10: Life business
Life business Australia’s largest annuity provider Life business overview Total Life sales ($bn) • Focuses on retirement spending phase of superannuation by providing 5.56 5.15 products converting retirement savings into safe and secure income 4.95 4.55 4.35 1 • Australia’s largest annuity provider
Slide 11: Challenger Life Company Limited
Challenger Life Company Limited Strongly capitalised and above top end of PCA guidance range FY20 excess capital CLC excess regulatory capital and PCA ratio 1700 2 • Regulatory capital $3.5 billion 1.81 1.54 1.7 • APRA PCA $2.0 billion 1 1.53 Challenger target 4 1200 PCA ratio 1.3x -1.6x 1.4 APRA mi
Slide 12: Funds Management
Funds Management 1,2 Australia’s fifth largest and one of the fastest growing asset managers Funds Management overview Funds Management FUM ($bn) • Focuses on building savings for retirement by providing 78.0 79.0 81.4 investment strategies seeking to deliver superior investment 66.9 returns 57.9 56
Slide 13: Funds Management – multiple brands and strategies
Funds Management – multiple brands and strategies Scalable and diversified ~$81bn of FUM Equities $26.3bn1 Multiple brands & strategies Alternatives $11.9bn1 Fixed Income $43.2bn1 About Challenger Group 1. Funds Under Management (‘FUM’) as at 30 June 2020. 13
Slide 14: FY20 outcomes
FY20 outcomes Normalised profit in line with guidance Statutory profit impacted by COVID-19 market sell-off 1 1 3 Group Assets Under Normalised NPBT ($m) Statutory NPAT ($m) CLC excess capital ($bn) 1 3 Management ($bn) Normalised NPAT ($m) CLC PCA ratio (times) 548 323 1800 1.81x 547 308 85.2 507 1
Slide 15: Key features of Challenger Capital Notes 3
Key features of Challenger Capital Notes 3 03
Slide 16: Key features: Distributions
Key features Distributions • 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 25 February 2021 Distributions • Distribution Payment
Slide 17: Key features
Key features Summary of events that may affect Challenger Capital Notes 3 Issue Date 25 Potentially Optional Exchange Date Mandatory Conversion Date November 2020 perpetual Each Distribution Payment Date after 25 May 2026 25 May 2028 25 May 2028 If the Mandatory Conversion Conditions If Conversion d
Slide 18: Key features: Optional Exchange and Conversion on Acquisition Event
Key features Optional Exchange and Conversion on Acquisition Event • Challenger may choose to Exchange all or some Challenger Capital Notes 3 on 25 May 2026 Exchange by 1 • Challenger may choose to Exchange all or some Challenger Capital Notes 3 after a Tax Event or a Regulatory Event Challenger • C
Slide 19: Key features: Mandatory Conversion
Key features Mandatory Conversion • On 25 May 2028, subject to satisfaction of the Mandatory Conversion Conditions illustrated below, Challenger Capital Notes 3 will Mandatorily Convert to a variable number of Ordinary Shares at a 1% discount to the 20 Business Day VWAP1, unless previously Converted
Slide 20: 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 1 Perpetual Subordinated Instruments is necessary because: – without conversion or write-off APRA considers that Challenger would become non-
Slide 21: Ranking of Challenger Capital Notes 3 in a winding-up
Challenger Capital Notes 3 Ranking of Challenger Capital Notes 3 in a winding-up ¹ Type Illustrative examples • Liabilities preferred by law including, policy liabilities, High ranking • Preferred and secured debt employee entitlements and secured creditors • Unsubordinated and unsecured debt • Bond
Slide 22: Key features: Comparison with other investments/securities
Key features Comparison between Challenger Capital Notes 3 and other investments/ securities Challenger annuity Term deposit Challenger Capital Notes 1 (‘CCN1’) and Challenger Capital Notes 3 Ordinary Shares Challenger Capital Notes 2 (‘CCN2’) Challenger Life Company Bank, credit union or Issuer Cha
Slide 23: Key risks
Key risks Key risks associated with an investment in Challenger Capital Notes 3 • Challenger Capital Notes 3 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 gua
Slide 24: Offer process
Offer process O4 A challenger {2
Slide 25: Offer process: Structure
Offer process Structure Institutional Offer • Offer to certain Institutional Investors Broker Firm Offer • Offer to Australian resident retail and other clients of Syndicate Brokers • Offer to Eligible CCN1 Holders to reinvest their Challenger Capital Notes 1 in Challenger Capital Notes 3. An Eligib
Slide 26: Reinvestment Offer and Repurchase Invitation
Reinvestment Offer and Repurchase Invitation Summary • The Reinvestment Offer is an invitation to Eligible CCN1 Holders to: – apply to Challenger to have the CCN1 Resale Proceeds relating to all or some of their Challenger Capital Notes 1 reinvested in the Challenger Capital Notes 3; and What is the
Slide 27: Options for Eligible CCN1 Holders
Options for Eligible CCN1 Holders Structure Option 1 • Apply directly to Challenger to participate in the Reinvestment Offer1 Option 2 • Apply through your Syndicate Broker to participate in the Reinvestment Offer1 Option 3 • Participate in the Repurchase Invitation Option 4 • Sell your Challenger C
Slide 28: Key dates for the Offer
Offer process Key dates for the Offer Key dates for the Offer Date Record date for determining Eligible Securityholders (7:00pm Sydney time) 8 October 2020 Lodgement of original Prospectus with ASIC 13 October 2020 Bookbuild to determine the Margin 20 October 2020 Announcement of the Margin 20 Octob
Slide 29: Key dates for the Reinvestment Offer and Repurchase Invitation
Offer process Key dates for the Reinvestment Offer and Repurchase Invitation Key dates for the Reinvestment Offer Date Record Date for determining Eligible CCN1 Holders (7:00pm Sydney time) 8 October 2020 Opening Date for the Reinvestment Offer 21 October 2020 Closing Date for the Reinvestment Offer
Slide 30: Contact directory
Offer process Contact directory Issuer Andrew Tobin, Chief Financial Officer +61 2 9994 7000 Challenger Limited Gavin Buchanan, Deputy Chief Financial Officer +61 2 9994 7482 Arrangers & Joint Lead managers Nicholas Chaplin +61 2 9237 9518 National Australia Bank Stefan Visser +61 2 9237 9505 Paul N
Slide 31: Challenger
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