Heartland Group (NZX:HGH) inks deal to buy Australia’s Challenger Bank

October 23, 2022 05:52 AM NZDT | By Manika
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  • Heartland signs an agreement to acquire Melbourne-based Challenger Bank.
  • The deal would give HGH an opportunity to expand in Australia.
  • HGH plans to fund the acquisition through its existing resources.

Heartland Group Holdings Limited (NZX: HGH) has signed an agreement to buy Challenger Bank, subject to regulatory approvals. The deal is worth NZ$39.8 million, or AU$36 million.

Challenger is a bank based out of Melbourne, Australia, and is known to be an authorised deposit-taking institution, offering services like savings and lending products. According to the HGH statement, these products could include government-guaranteed term deposits and home loans. 

As per the agreement, once the deal is finalised, HGH plans to place its Reverse Mortgage and Livestock business under the Challenger Bank. This will provide an opportunity for Heartland to expand its business into Australia with its two product offerings in the country.

Further, the company said that the cost of acquisition is likely to be funded through existing resources.

Reasons behind the acquisition

  • As per the update, Heartland decided to acquire Challenger in order to expand into the Australian market. 
  • The deal will give Heartland access to funding to support its growth
  • The deal will also provide a platform to Heartland to extend its products into Australia.

Earlier, on 23 August 2022, Heartland had said that it was looking to acquire Avenue Hold Limited but discontinued that in favour of Challenger Bank.

Q1 update
According to a company update, the Q1FY23 ended 30 June has seen growth across three portfolios- reverse mortgage, motor, and asset finance.

Reverse Mortgage was a focus area for HGH both in Australia and New Zealand.

As per the update, reverse mortgages in both geographies maintained strong growth of 24.4% and 19.3%, respectively, in 1Q2023 on an annualised basis.

The asset finance business of Heartland reported growth of 10.3% on an annualised basis in the same quarter of FY21.

Stock price

On 21 October 2022, the stock was up 1.76% at NZ$1.730 at the time of writing this article.




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