Japanese insurer Dai-ichi Life said on Monday it had entered a conditional agreement to buy a 15.1% stake in Australian peer Challenger from MS&AD Insurance Group for 80 billion yen ($551.27 million).
The purchase price of A$8.46 per share represents a 52.7% premium to Challenger’s closing price on Friday. Dai-ichi Life would buy the stake through its Australian unit TAL, which it bought in 2011, it said.
Japan’s MS&AD Insurance was the biggest shareholder in Challenger, holding a 15.1% stake in Australia’s largest annuities provider as of July 31, 2024, according to data compiled by LSEG.
Annuities are income products, sold by insurance companies, which provide financial stability to the purchaser after retirement.
With its investment in Challenger, TAL would be looking to tap into the country’s A$4.2 trillion ($2.54 trillion) retirement savings sector.
“TAL recognises the evolving needs of Australia’s ageing population and a shareholding in Challenger adds to TAL’s long-term commitment to the growing retirement sector,” TAL said in a statement.
MS&AD Insurance said in a statement it had been looking to improve its capital efficiency, and accepted Dai-ichi Life’s offer considering the sufficient premium.
“Dai-ichi Life is a global leader in life insurance… we welcome their significant investment in our business and will explore future opportunities that support our strategic objective,” Challenger CEO Nick Hamilton said.
The deal is subject to approvals from the Australian Foreign Investment Review Board and the Australian Prudential Regulation Authority.
Reuters
