The confluence of Cuffe, Challenger and Consolidated Press

IT TOOK less than a week and hardly gave anyone time to ask where he would appear next, but Chris Cuffe is back in the saddle having taken on the role of chief executive with CPH Investment Corp (CPHIC), the investment group held by Kerry Packer’s CPH Ltd.

But what is even more incredible than the short amount of time between Cuffe announcing he would leaveColonialin June and then Colonial announcing he was leaving as soon as possible, is the fact that Cuffe has signed up with a group that is looking at a marriage with Challenger International.

The entrance of CPHIC into the wider financial services market should come as no surprise because it has long been speculated that Kerry Packer has been keen to get into the market in some form, if not to make a buck of his own, at least to expand the capabilities of the investment group.

CPHIC was originally formed to hold, among other things, a large number of Fairfax shares, which have since been disposed of leaving the investment group with $400 million in cash and little else.

At the same time Packer, through groups such as Cavalane Holdings, has picked up a stake in Challenger, which late last year was just under 20 per cent of the stock, while the next biggest holder — Bill Ireland’s Universal Equity held almost 11 per cent.

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And if further confirmation was needed of the plays that Packer and Co had up their sleeve for Challenger late last year it was that Packer and long-time business associate Lloyd Williams both moved onto the board.

Their time was short, both stepped down last week along with James Packer and Ashok Jacob, also from the Packer camp, in an effort to avoid conflicts of interest ahead of the proposed merger.

Under the conditions of the merger, CPHIC would acquire all of Challenger’s ordinary shares as well as its convertible notes and options.

The scheme of arrangement for the shares is that CPHIC would exchange 4.5 shares for each ordinary Challenger share.

According to CPHIC, this represents a premium of 17 per cent for the Challenger shares based on their average price over recent weeks.

If the merger does go ahead after meeting shareholder and regulatory approval, it will create a combined entity with a market capitalisation of $930 million and boost the Packer concerns in Challenger to about 24 per cent and drop Ireland’s to about eight per cent.

The future for Ireland is not assured despite the fact that he was the person responsible for building up the investment group and making it a national player, albeit not one that has yet to really exert its influence in the local market.

But at the end of the day the real winner was Chris Cuffe and, in a way, his successor at Colonial, John Pearce. In taking the CPHIC job, Cuffe had a new role in the industry but also had to resign immediately from Colonial.

In doing so this ensured Pearce was the man with the job and title of chief executive at Colonial and removed the unusual situation of having both men in the group while Cuffe bided his time until his original June resignation date.

Understandably Cuffe is happy with his new role but is also reserved about what lies ahead, especially in the light of the merger, which despite the general thumbs up from the market is still not afait accompli.

However, Cuffe says he will be bringing some of the things he has learnt from past acquisition experience to the venture.

This includes examining the people and culture and then the products on offer and considering what works and what targets they meet, which he says “will not take years to do”, indicating that Cuffe will not be slow in putting his mark on either CPHIC or any merged group that may be formed.