Packer takes up financial challenge

Kerry Packer’s recent funds management acquisitions look set to turn the distribution of retail financial services on its head.

Late last year Packer's private company, Consolidated Press Holdings (CPH), took significant stakes in MTM Funds Management and Challenger International.

This gave the media magnate access to a full suite of financial services to distribute through his magazine, television and Internet empire.

The purchases coincide with the launch magazine by Packer's Australian Consolidated Press (ACP) ofMoneymagazine, based on the successful television show broadcast on Packer's Nine network and hosted by Paul Clitheroe.

Challenger International managing director Bill Ireland confirmed CPH's $41.5 million investment in Challenger would form the cornerstone of an alliance that included distribution arrangements.

Robert Ireland, the head of distribution at Swiss Re, warned at last year's nextdistribution conference that media companies could pose the next big competitive threat to distributors of retail financial services. He said such companies would in future be in an excellent position to act as gatekeepers to consumers, much as financial advisers do today.

"Digital media providers won't be able to resist the temptation to join the game," he predicted.

Challenger Life's Ireland says the company is on the verge of launching an Internet presence that will eventually include the hugely successful ninemsn.com and PBL web sites.

But he also stresses the Internet is part of a multi-channel distribution strategy which is still primarily focussed on servicing financial advisers.

CPH will eventually hold a 20 per cent stake in Challenger and the $41.5 million will be deployed as new capital for Challenger Life.

Ireland says capital in the life company now stands at more than $100 million. He says the extra capital will help deflect what he calls "cheap shots suggesting Challenger is a ten bob company" from rival groups.

It will also help position the group as a pre-eminent player in the retirement income streams, he says. Challenger is currently offering the highest yields in 1 to 15-year income based annuities.

"The new capital in the life company will allow it to play a leading role in the annuities sector, support the strong growth anticipated in this sector and assist with new product development," Ireland says.