Australian non-bank lender Pepper Money has received a takeover offer from investment manager Challenger and majority shareholder Pepper Group, valuing the company at A$1.16 billion ($815 million). The proposal offers A$2.60 per share, representing a 47.7% premium to the last closing price. Pepper Money's shares surged nearly 33% in their biggest intraday gain on record, whilst Challenger's shares fell as much as 7.51%. Challenger will cap its stake at 25% if the deal proceeds, whilst Pepper Group will retain at least its current 60% holding. The independent board has granted Challenger exclusive access for due diligence. Founded in 2000, Pepper Money specialises in home loans, asset finance and commercial lending, reporting A$98.2 million net profit in 2024.

Challenger makes bid for Pepper Money. Investment management firm Challenger has made an offer to acquire non-bank lender Pepper Money, with discussions ongoing. Challenger Limited (Challenger) - one of Australia's largest providers of annuities - has made an offer to acquire listed non-bank lender Pepper Money. According to an announcement from both Pepper Money and Challenger on Monday (9 February), it is proposed that Challenger and Pepper Group ANZ HoldCo Limited (Pepper Group) would jointly acquire Pepper Money. The transaction is proposed to be structured as a scheme of arrangement under which, if completed, Challenger would hold no more than 25 per cent of total Pepper Money shares. The bid offers Pepper Money shareholders (other than Pepper Group) cash consideration equal to $2.60 per share (less the final dividend in respect of 2025 and any special dividend paid or declared). Pepper Group would initially acquire an interest in the acquiring entity that is at least equal to its current interest in Pepper Money. The Pepper Money board has established an Independent Board Committee to assess the proposal and has granted Challenger exclusivity to undertake confirmatory due diligence and progress relevant transaction documentation in order to present "a more certain" proposal. While the lender has said there is "no certainty that a more certain proposal will be forthcoming" or that the indicative proposal would result in a definitive agreement, the lender said that "discussions are ongoing". Challenger has confirmed that it has been engaging in discussions relating to a potential transaction, stating that an investment in Pepper Money would provide Challenger with "strategic, long-term rights to access fixed income assets to support growth and returns". It said that any transaction would be "strategic and accretive to Challenger's earnings per share". The investment management firm said: "The discussions, while advanced, are incomplete and there is no certainty the offer will eventuate in any transaction." Both Pepper and Challenger have said they will keep the market informed in accordance with their continuous disclosure obligations. Pepper Money, originally founded in 2000, has been through several ownership structures over its 25-year history. It was first listed on the stock exchange in 2015, before being taken private when US private equity firm KKR acquired it in 2017. It was relisted on the Australian Securities Exchange in May 2021 through an IPO that raised about $500 million and valued the non-bank lender at roughly $1.3 billion. Since then, the lender has been expanding its loan book both organically and inorganically, having launched several new products and broadened its credit appetite, as well as through loan book acquisitions. Further details on the lender's expansion and future are expected when it releases its full-year results on 19 February. Annie Kane is the managing editor of Momentum's mortgage broking title, The Adviser. As well as leading the editorial strategy, Annie writes news and features about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape. She is also the host of the Elite Broker, New Broker, Mortgage & Finance Leader, Women in Finance and In Focus podcasts and The Adviser Live webcasts. Annie regularly emcees industry events and awards, such as the Better Business Summit, the Women in Finance Summit as well as other industry events. Prior to joining The Adviser in 2016, Annie wrote for The Guardian Australia and had a speciality in sustainability. She has also had her work published in several leading consumer titles, including Elle (Australia) magazine, BBC Music, BBC History and Homes & Antiques magazines.

Spark partners with Challenger for new mobile financing structure. Spark New Zealand (Spark) announced a partnership with ASX-listed financial services organisation Challenger Limited to establish a new financing structure for its interest-free payment (IFP) plans. This initiative aims to reduce working capital on Spark's balance sheet and support the continued growth of IFP as a key tool for customer acquisition and retention in its mobile business. Spark will sell eligible receivables from its existing IFP customers to Challenger for ~$240 million, with proceeds used to reduce net debt. This transaction is not expected to materially affect Spark's net debt to EBITDAI ratio. The partnership also includes an ongoing arrangement to sell future IFP receivables to Challenger regularly. This collaboration is set to enable Spark to continue expanding its mobile business while improving capital efficiency and return on invested capital. Spark will retain full control over the customer experience, including credit checks and collections.