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Wednesday 26 June 2024

Heartland Group (ASX: HGH) approved for acquisition of Challenger Bank

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce that it has received indicative regulatory approvals from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ) for Heartland Bank Limited’s (Heartland Bank) acquisition of Challenger Bank Limited (Challenger Bank) from Challenger Limited (ASX: CGF). Subject to receipt of final regulatory approvals, Heartland Bank expects to complete the acquisition of Challenger Bank on 30 April 2024 (Completion).

Highlights:

To accelerate growth in Australia, Heartland will leverage Challenger Bank’s foundation and funding platform, Heartland’s successful track record in Australia, and its New Zealand product and distribution expertise. This will enable Heartland Bank Australia to expand into new product segments in which Heartland Bank has specialist expertise in New Zealand, such as Motor Finance and Asset Finance.

-Heartland has announced a NZ$210 million equity raise to facilitate the completion of the Challenger Bank acquisition. The proceeds of the equity raise will be used to:

1. finance the balance of the consideration payable for the Challenger Bank acquisition

2. support the expected regulatory capital requirements of Challenger Bank and Heartland Bank

3. cater for near-term asset growth post-Completion.

– Having regard to the equity raise, acquisition of Challenger Bank, and associated growth opportunities, the Board expects to target a total dividend payout ratio in the financial year ending 30 June 2024 of 50% of underlying net profit after tax.

Commentary

Heartland Board Chair, Greg Tomlinson said “Completing the Challenger Bank acquisition will make Heartland Bank the first New Zealand registered bank to acquire an Australian Authorised Deposit-Taking Institution (ADI). Subject to completion, under Heartland Bank’s ownership, Challenger Bank will be rebranded to Heartland Bank (Heartland Bank Australia), providing a platform to extend Heartland’s “best or only” strategy in Australia. Once Heartland Australia becomes part of Heartland Bank Australia, it will be the only specialist bank provider of both reverse mortgages and livestock finance in Australia.”

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