Channel Capital and Fidante to merge

Challenger announced it has entered into a binding agreement to merge its multi-affiliate funds management business, Fidante, with Channel Capital.

Under the agreement Fidante will become part of the newly formed entity Channel Group and will be led by current Channel Capital managing director Glen Holding.

Fidante will continue to operate as a standalone brand but will benefit from broader scale in the combined entity with around $150 billion on assets, Challenger said.

Challenger will own 45% of Channel Group and receive up to $172 million in cash payments subject to certain conditions. Existing Channel Capital shareholders and Channel Group management will own 55% of Channel Group equity.

Challenger is set to recognise around $100 million in pre-tax gains on the sale in FY27.

Channel Group will have an independent chair jointly appointed by Challenger and Channel Capital, in addition to four directors appointed by Channel Capital and two appointed by Challenger.

Challenger chief executive Nick Hamilton said the merger will take Fidante into its next phase of growth as part of a larger and more diversified active funds management platform.

"This merger ensures we can remain strategic holders of Fidante while benefitting from a more diversified multi-affiliate platform," Hamilton said.

"We have been deliberate in our decision to pursue a merger with a strategically and culturally aligned business that will deliver strong outcomes for shareholders, affiliates and our employees.

"We're excited by the creation of Channel Group, the broader geographic reach and wider investor base it will provide to affiliates, increased career opportunities for our people, and the benefits for Challenger as a long-term holder and partner in a business we're building together."

Channel Capital said the merger positions Channel Group as one of Australia's largest investment platform and services businesses, supported by over 240 professionals across 11 global offices, with the capabilities to serve a diverse range of clients.

Channel Group will centralise operational expertise across shared infrastructure, including responsible entity and governance services. Within the group, Channel Capital, Fidante and Continental Funds Group will continue to operate as distinct, client-facing businesses.

Channel Capital said the model preserves the unique identities, investment philosophies and affiliate relationships that underpin each business' success, while enabling them to benefit from shared capabilities and operational scale.

Channel Group chief executive Glen Holding said: "Bringing together the strength and expertise of Channel Capital and Fidante creates a highly diversified, resilient platform with the ability to invest through market cycles.

"It's a truly distinctive proposition - one that gives boutique Australian managers the resources to grow, while offering global managers a proven, trusted gateway into the Australian market. That combination is highly differentiated in the market, and it's what will drive the next decade of growth for Channel Group."

Channel Group will operate across three core business lines: affiliate partnerships providing equity and revenue participation in boutique investment managers; distribution partnerships with major global firms; and institutional infrastructure services - including responsible entity, fund services and middle-office solutions - to major institutional clients.

"This transaction establishes a platform with the scale and structure to support long-term growth," Holding said.

"We have combined complementary capabilities while maintaining the brands and relationships that sit at the centre of client engagement."

Completion of the merger remains subject to regulatory approvals.