Retirement product issuer and fund manager Challenger (ASX: CGF) has confirmed that Japanese insurance giant Dai-ichi Life will acquire the minority 15.1% interest previously held by MS&AD Insurance Group.

The parties have transacted the sale at approximately $8.46 per Challenger share, representing a premium of 53% to the most recent closing share price.

Dai-ichi will conduct the acquisition – which is subject to customary regulatory approvals from the Australian Foreign Investment Review Board and the Australian Prudential Regulation Authority – through subsidiary TAL Dai-ichi Life Australia.

Long-term commitment

TAL chief executive officer Fiona Macgregor said the minority investment reflected a long-term commitment to the retirement income solutions sector.

“There is an important community need to address, with five million Australians currently in or preparing for life after their careers,” she said.

“Our minority investment in Challenger is an extension of our commitment to supporting Australians’ financial needs during their retirement.”

‘Mutually beneficial’

Challenger managing director Nick Hamilton welcomed Dai-ichi to the company’s registry.

“Dai-ichi is a global leader in life insurance and we look forward to building a mutually beneficial relationship for our customers and shareholders, with future opportunities that support our strategic objectives,” he said.

“This is an exciting time for Challenger as we deliver our growth strategy and provide financial confidence to even more Australians in retirement.”

Reinsurance partnership

Last year, Challenger and MS&AD subsidiary Mitsui Sumitomo Primary Life Insurance renewed a reinsurance partnership for five years and Mr Hamilton said the arrangement continued to deliver “well above” minimum volume levels.

“Challenger and MS Primary have successfully collaborated over the last decade to create significant shared value and this partnership will not be impacted by the share sale,” he said.

MS&AD executive Masahiko Kobayashi will step down from his role as non-executive director on the Challenger board once Dai-ichi has completed the acquisition.