Challenger acquires wholesale mortgage business

Challenger Financial Services Grouphas agreed to acquire Zurich Capital Markets’ (ZCM) Australian Principal Finance business, Interstar Securities, in a deal struck by its responsible entity, the Kerry Packer-owned CPH Management.

Challenger will acquire 100 per cent of Interstar’s issued capital for $85 million, together with a high yield fixed interest portfolio for $48 million.

Challenger has also agreed to acquire 84,500 hectares of forestry assets valued at $54 million from ZCM on a 12 month deferred settlement basis in order to secure Interstar.

One of Australia’s largest independent and privately held non-bank wholesale mortgage financiers, Interstar Securities has experienced portfolio growth of 53 per cent per year on average for the past 3 years, to now stand at $11 billion in mortgages.

According to Challenger chief executive Chris Cuffe, the acquisition allows Challenger to enhance its broader financial services platform, with Interstar providing synergies in technology platforms and distribution of products and services, as well as the opportunity to leverage Interstar’s global capital markets capability.

Challenger chairman James Packer said Interstar will play a significant role in the growth of the mortgage-related activities of Challenger and that it would provide an opportunity to introduce other debt-style products to the wholesale origination network.

“Interstar offers terrific compatibility for Challenger in terms of building the business as a broad based, multi-faceted financial services company,” Packer says.

The deal is due to be settled by the end of the month.