The S&P/ASX 200 Index (ASX:XJO) ended the day higher by 0.7%. Challenger Ltd’s (ASX:CGF) share price rose 4.5% after an acquisition.
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The S&P/ASX 200 Index (ASX:XJO) went up by 0.7% today to 6,643 points.
Here are some of the highlights from the ASX:
Challenger Ltd (ASX: CGF)
The ASX 200 annuity business announced today that it’s going to buy a bank.
Challenger is buying MyLifeMyFinance, which is an Australia savings and loans bank, for $35 million.
The company likes the acquisition because it’s highly strategic and provides Challenger with the opportunity to significantly expand its secure retirement income offering.
After the acquisition, Challenger will hold an Australian Prudential Regulation Authority (APRA) authorised deposit-taking institution (ADI) licence, providing access to Australia’s $1 trillion term deposit market.
Challenger will initially focus on expanding the term deposit offering by replicating the investment strategy used to support Challenger’s annuity business. Under Challenger ownership, it said it will be able to provide term deposit customers with “compelling value” across a range of tenors.
The CEO and managing director Richard Howes said: “Adding a digital domestic banking capability to sit alongside our existing life and funds management operations will further broaden the ways in which we provide financial security for retirement and will further diversify our distribution channels.
“Term deposits represent a significant asset class for Australian retirees and entering the market provides an opportunity to play a greater role supporting the retirement incomes of our customers, while also attracting a new cohort of customers.
“Authorised deposit-taking institutions have had great success in attracting government guaranteed retail deposits. We see a significant opportunity to leverage our leading retirement income position and capability to manufacture guaranteed returns for our customers.”
The Challenger share price rose by more than 4% in response.
Smartgroup Corporation Ltd (ASX: SIQ)
Smartgroup provided an update about its earnings guidance for the year to 31 December 2020.
Following a stronger second half performance, Smartgroup expects to report that the 2020 net profit will be approximately $65 million.
The profit performance has been supported by an improved operating earnings before interest, tax, depreciation and amortisation (EBITDA) margin of approximately 44% in the second half, up from 43% in the first half of 2020. Operating EBITDA is expected to be approximately $47 million for the second half.
Improved cost controls helped offset a forecast 3% fall in novated leasing volumes from the first half. The second half result also includes 8% lower yields, reflecting the impact of the previously announced insurance price reductions that became effective 1 July 2020.
The number of salary packages and novated leases under management are forecast to be in line with the first half.
Smartgroup managing director and CEO Tim Looi said: “We expect to deliver an encouraging full year profit result demonstrating the resilience of our business in a challenging operating environment. We are seeing a positive trend in the number of novated lease enquiries and settlements in respect of new vehicles.
“However, we remain cautious. The current environment is fragile with the potential for further economic disruption due to COVID-19 public health responses and the potential knock on effects these may have on consumer confidence and our business.”
The Smartgroup share price rose by 7.6%.
Transurban Group (ASX: TCL) distribution
Toll road giant Transurban announced its distribution for the six months to 31 December 2020.
Transurban announced that a distribution totalling 15 cents per security will be paid for the half-year. The FY21 distribution is still anticipated to be in line with its free cash flow generation, excluding capital releases. That includes the 15 cents distribution that has just been declared.
A distribution re-investment plan will be in operation for this distribution, though there won’t be any discount.
The Transurban share price rose by 0.4% in response.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.