Challenger Limited, the Australian listed financial group with over A$60bn in assets, has acquired London based alternative investments specialist Dexion Capital in a deal valued at £19.6m, but which also promises additional earn-out payments to Dexion executives depending on profitability over the next six years.
Challenger made the deal through its boutique fund management division Fidante Partners.
By acquiring Dexion, Fidante will grow its presence in the European alternative investments universe. Dexion has undertaken some 110 transactions and raised over $18bn across its UK listed funds business. There are also Dexion branded funds, boutique partnerships in areas such as agriculture, social housing and alternative energy, and corporate services.
Fidante has previously developed interests in UK based global infrastructure investor Whitehelm Capital and asset backed security specialist WyeTree Asset Management.
Ian Saines, Challenger chief executive Funds Management, said: “This represents a significant step- up in our European presence and is an important part of our international distribution and product expansion. Dexion Capital’s funds management operation provides a scalable platform to realise our ambition of replicating Fidante Partners’ successful multi-boutique model in the European market, while opening up global distribution opportunities for our existing boutique managers.”
“Dexion’s origins are in the development and marketing of innovative alternative asset investment strategies and this focus means it is well positioned as investors increase allocations to alternative asset classes.”
“It provides us with a large established distribution channel to UK and European investors and, in addition, has been evolving into a multi-boutique manager much like Fidante Partners, taking long-term interests in asset managers and supporting them with distribution and operational services.”
Robin Bowie, Dexion Capital founder, said: “We are very pleased to be joining forces with Fidante Partners which is a highly successful multi-boutique fund manager in the world’s fourth largest pension market, Australia.”
“We believe that bringing the capability of Fidante Partners to Dexion Capital is very attractive to both investors and managers. For investors, it provides access to a range of managers who have the same high standards of reporting, governance, transparency and fair fees via our combined platform. For managers, it builds on Dexion Capital’s existing distribution strengths by adding Fidante’s capability in Australia.”
“Alternatives are the fastest-growing investment sector and will comprise 15% of global assets under management and 40% of revenues by 2020. Moreover, boutique managers punch above their weight in alternatives.”
This type of acquisition is unlikely to be the last, according to the firm that advised Dexion on the deal Cavendish Corporate Finance.
Peter Gray, partner and head of the financial services team at Cavendish, who led on the deal, said: “Dexion is a first class operator in the fast growing alternative assets market and in Fidante Partners, it has found the perfect partner to facilitate the globalisation of the combined business.”
“Dexion is the 14th transaction on which Cavendish has advised thus far in 2015 and following hard on the heels of our recently announced sale of Resolution Property, the leading property investment company, to Chinese conglomerate Fosun, this deal continues the trend of high quality UK financial services businesses attracting interest from overseas acquirers.”