Challenger Limited · ASX:CGF
Challenger — Debt Investor Presentation (August 2014)
26 slides from Challenger's debt investor presentation, Aug 27, 2014
Slide 1: Challenger Capital Notes Offer
Challenger Limited Challenger Capital Notes Offer 27 August 2014
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 (“Notes” or “Challenger Capital Notes
Slide 3: Outline
Outline Section 1 Offer summary Section 2 About Challenger Section 3 Key features of Challenger Capital Notes Section 4 Offer process 3
Slide 4: Section 1: Offer summary
Section 1 Offer summary
Slide 5: Offer summary
Summary Offer summary • Challenger Limited (Challenger) ‒ non-operating holding company of an investment management group managing more than $50 billion in assets1 and the leading provider of annuities and guaranteed retirement Issuer incomes in Australia ‒ operates two businesses, a life business a
Slide 6: Offer summary (cont'd)
Summary Offer summary (cont'd) • Optional Exchange Date: 25 May 2020 • Scheduled Mandatory Conversion Date: 25 May 2022 • Perpetual (no fixed maturity date) unless Converted, Redeemed or Resold • Mandatory Conversion: Subject to the Mandatory Conversion Conditions being satisfied, Term Challenger mu
Slide 7: Section 2: About Challenger
Section 2 About Challenger
Slide 8: Business overview
About Challenger Business overview Challenger Limited • ASX100 listed company (under the code “CGF”) with $4.2bn market capitalisation1 • $50.7bn of assets under management2 • Over 500 employees and $2.2bn in net assets2 • Non-operating holding company and ultimate parent company of the Challenger G
Slide 9: Competitive advantage with favourable policy settings
About Challenger Competitive advantage with favourable policy settings Life Funds Management Supportive demographics Mandated superannuation system Over 65’s to increase by 75% in next 20 years 1 Growth underpinned by mandatory contributions Market Consumer risk preferences Contributions increasing
Slide 10: Life business (Challenger Life Company)
About Challenger Life business (Challenger Life Company) Overview • Annuity and guaranteed retirement income products distributed to retail customers through independent financial advisers and to financial advisers associated with the four major Australian banks and AMP Limited • Life generates inco
Slide 11: Funds Management business
About Challenger Funds Management business Overview • Funds Management business comprises Fidante Partners and Challenger Investment Partners • As at 30 June 2014, Challenger had $47.1bn in FUM, up 133% since 30 June 2010. Fidante Partners • Interests in fifteen separately branded active boutique in
Slide 12: FY14 operating performance – strong business momentum
About Challenger FY14 operating performance – strong business momentum • Normalised EBIT up 6% to $388m • FY14 dividend up 30% to 26.0 cps • Normalised NPAT1 up 7% to $329m • Normalised RoE (pre tax) of 19% Challenger Group • Statutory NPAT1 of $341m • Growth outlook enhanced by policy settings • No
Slide 13: Capital management
About Challenger Capital management Strongly capitalised • Challenger Life Company (CLC) is regulated by APRA CLC excess regulatory capital ($m) (increases by $0.5bn) • New APRA life company prudential standards (LAGIC) 1,600 implemented on 1 January 2013 1,200 – increased CLC’s capital requirements
Slide 14: Section 3: Key features of Notes
Section 3 Key features of Notes
Slide 15: Key features: General
Key features General Issuer • Challenger Limited (Challenger) • Fully paid, subordinated, perpetual, non-cumulative, unsecured, redeemable, mandatorily Security convertible notes (Notes) Offer size • $250 million with the ability to raise more or less Issue Price • $100 per Note • Notes rank ahead o
Slide 16: Key features: Distributions
Key features Distributions • Distributions are floating rate, preferred, discretionary, non-cumulative frankable payments • Distributions are scheduled to be paid quarterly in arrears, subject to Payment Conditions • Distributions on Notes may be partially franked, fully franked or not franked at al
Slide 17: Key features: Exchange
Key features Exchange • Challenger may choose to Exchange all or some Notes on 25 May 2020 Exchange by • Challenger may choose to Exchange all or some Notes after a Tax Event or a Regulatory Event Challenger1 • Challenger may choose to Exchange all (but not some only) Notes after a Potential Acquisi
Slide 18: Key features: Mandatory conversion
Key features Mandatory conversion • The Mandatory Conversion Date will be 25 May 2022 provided the Mandatory Conversion Conditions have been satisfied on that date or on the first Distribution Payment Date thereafter on which such conditions are satisfied Mandatory Conversion • On the Mandatory Conv
Slide 19: Key features: Non-viability conversion
Key features Non-viability conversion • A Non-Viability Trigger Event occurs where APRA determines that the conversion or write-off of Relevant Perpetual Subordinated Instruments is necessary because: – without conversion or write-off APRA considers that Challenger would become non-viable; or – with
Slide 20: Comparison between Notes and other investments / securities
Key features Comparison between Notes and other investments / securities Challenger annuity Term deposit Challenger Capital Notes Ordinary Shares • Bank, credit union or Issuer • CLC • Challenger • Challenger building society • Policy (unsecured, unsubordinated debt obligation • Unsecured, Legal for
Slide 21: Ranking of Notes in a winding-up
Notes Ranking of Notes in a winding-up Type Illustrative examples¹ High • Liabilities preferred by law including employee • Preferred and secured debt ranking entitlement and secured creditors • Unsubordinated and unsecured debt • Bonds and notes, trade and general creditors • Subordinated notes and
Slide 22: Key risks associated with an investment in Notes
Key features Key risks associated with an investment in Notes • Notes are not policy liabilities of CLC, Challenger or any other member of the Challenger Group and are not guaranteed or insured by any government or other person • The market price at which Holders are able to sell Notes on ASX is unc
Slide 23: Section 4: Offer process
Section 4 Offer process
Slide 24: Offer process: Structure
Offer process Structure Institutional Offer • Offer to certain institutional investors Broker Firm Offer • Offer to Australian resident retail and high net worth clients of Syndicate Brokers • Offer to Eligible Shareholders ‒ registered holders of Ordinary Shares as at 7.00pm on 19 August 2014, Shar
Slide 25: Offer process: Key dates
Offer process Key dates Event Date1 Lodgement of Prospectus with ASIC 27 August 2014 Bookbuild to determine the Margin 3 September 2014 Announcement of the Margin 3 September 2014 Lodgement of the replacement prospectus with ASIC 4 September 2014 Opening Date 4 September 2014 Closing Date for the Sh
Slide 26: Contact directory
Offer process Contact directory Issuer Andrew Tobin Chief Financial Officer +61 2 9994 7000 Challenger Limited Gavin Buchanan Group Treasurer +61 2 9994 7482 Structuring Adviser & Joint Lead Manager Andrew Buchanan +61 2 9324 2617 UBS Joe Hunt +61 2 9324 3718 Joint Lead Managers Duncan Beattie +61 2
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