Challenger looks to expansion of servicing non-bank mortgage loans
Buying Bluestone Home Loans New Zealand mortgage book is part of Australian-listed Challenger’s plans for further expansion in New Zealand.
Monday, January 13th 2025, 9:21AM
by Sally Lindsay
Buying Bluestone Home Loans New Zealand mortgage book is part of Australian-listed Challenger’s plans for further expansion in New Zealand.
The listed investment management company bought Bluestone’s mortgage portfolio for $597 million in November.
To facilitate the acquisition, Challenger Life Company established Challenger NZ HoldCo1, a New Zealand subsidiary of Challenger, to obtain the required licences and registrations to service the loans.
Challenger NZ HoldCo1 is 53% owned by investors in Australia, 22% America, 15% Japan, 5% UK and 5% by various other.
Challenger Investment Management (CIM) head of whole loans Andy Armstrong says with a servicing capability in place, there is a significant opportunity to make whole loan investing a core part of its overall allocation.
“The whole loans asset class (including mortgages, personal loans and asset finance) is a large and significant asset class both in Australia and globally offering compelling returns”
He says CIM has a long track record in whole loan investments in New Zealand and we look to expand our capabilities in the region.
“We are looking at both forward flow opportunities (ongoing arrangement where the loan goes straight onto the balance sheet of the nonbank lender and Challenger services the loans) and block portfolio opportunities.”
CIM has been investing in residential mortgage whole loans in New Zealand since 2017 in addition to being a long-standing investor in New Zealand commercial real estate and acquisition finance markets, Armstrong says.
Over the past 10 years, CIM has invested in whole loan portfolios by buying mortgage loans directly from nonbank lenders.
More recently it has expanded its mortgage servicing platform that will enhance its private loan investment capabilities.
“The whole loans asset class (including mortgages, personal loans and asset finance) is a large and significant asset class both in Australia and globally offering compelling returns,” he says.
Bluestone Home Loans quit New Zealand in August last year after a strategic review found the New Zealand specialist non-bank lending market was well serviced and the opportunity and market fit for it was too small.
CIM is one of the largest nonbank investors in Australian and New Zealand securitised credit. It has longstanding partnerships and relationships with the majority of Australia and New Zealand’s nonbanks, and has been providing senior and mezzanine financing, in public and private markets, for more than a decade.
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