Elanor Moves Forward with Acquisition of Challenger Platform

16 June 2023

Elanor’s move on Challenger continue to progress despite a third party advisory contract falling away.

As a result of the loss of the loss of the third party, the purchase price for Challenger has been reduced to $37.7 million, however incremental AUM from the transaction remains at $3.4 billion.

The acquisition delivers a step-change in size and scale for Elanor, increasing AUM from $3.0 billion to $6.4 billion, with the strategic partnership with Challenger positioning Elanor for further strong growth.

Elanor will issue 24.8 million securities as consideration for the acquisition of CRE, representing up to 16.7% of ENN securities on issue. On Completion of the transaction, it is proposed that Challenger will hold a 13.7% interest in Elanor and Abu Dhabi Investment Council (“ADIC”) will hold a 3.0% interest. This reflects Challenger’s proposed agreement to transfer 4.5 million of the 24.8 million Elanor securities to be issued to Challenger to ADIC. The Consideration is subject to claw-back from Challenger (of up to 63% over three years) based on certain milestones, including minimum base funds management fee targets.

Compelling strategic and financial rationale

The acquisition and strategic partnership deliver substantial value to Elanor, including:

  • Material FY24 earnings accretion
  • CRE has been acquired on a ~3×1 EBITDA multiple (after revised Consideration and improved synergies) with incremental EBITDA of ~$12 million
  • Strengthened recurring funds management income with base management fee income increasing by approximately 57%. Pro-forma base management fees, post-Transaction, represent approximately 74% of total funds management income2
  • Step-change in size and scale with AUM growing to $6.4 billion
  • Exclusive distribution agreement combines Elanor’s leading real estate funds management platform with Fidante’s award-winning capital raising capability, positioning Elanor for continued strong growth
  • Alignment of interests with Challenger becoming Elanor’s largest securityholder (with a representative on the Elanor Board)

Grant of options to ADIC

Elanor will grant ADIC options to acquire up to 7.5 million Elanor securities subject to certain conditions being satisfied. ADIC’s interest in Elanor will increase to 7.7% if all the options are vested and exercised.

The options will be exercisable in three equal tranches of 2.5 million securities over the next three years with exercise prices of between $2.25 to $2.75 per security. Tranches 2 and 3 of the options have vesting milestones linked to ADIC increasing its investment mandates with Elanor by a further $0.5 billion in AUM.

Elanor Chief Executive Officer, Glenn Willis, said “We are pleased to have secured the transfer of the ADIC mandate, and ADIC becoming a substantial investor in ENN. We look forward to delivering strong investment returns for ADIC’s real estate investments and growing AUM for the Elanor Group.”

Completion of the Transaction is subject to certain conditions, including ENN securityholder approval and other regulatory approvals.

Further updated transaction details are contained in the accompanying supplementary Notice of Meeting and Explanatory Memorandum for the ENN Extraordinary General Meeting (EGM).

  Event  Date
ENN Securityholder Meeting  30 June 2023
Elanor Consideration Securities issued  7 July 2023
Settlement of the transaction  7 July 2023