Challenger Selects State Street as Custodian and Back-, Middle- and Front Office Investment Administrator Through State Street Alpha®

Rhea-AI Summary

State Street (NYSE: STT) has been selected by Challenger , an Australian investment management firm, to provide custody and investment administration services for assets worth A$127 billion. This partnership involves State Street's Alpha® platform, integrating front-, middle-, and back-office operations. The deal covers Challenger's entire group, including Fidante, Challenger Investment Management, and Challenger Life.

As part of this agreement, approximately 100 Challenger employees will transfer to State Street in October. David Mackaway, current CEO of Artega, will also join State Street, bringing significant industry experience. This move strengthens State Street's position in the Australian market and enhances its capacity to serve complex client needs.

Positive

• Secured a major client (Challenger ) with A$127 billion in assets under management
• Expanded service offering to include custody and full investment administration services
• Gained approximately 100 experienced employees from Challenger
• Strengthened position in the Australian market
• Acquired expertise of David Mackaway, an industry veteran with 25+ years of experience

Negative

• None.

Financial Analyst

This partnership between Challenger and State Street is a significant development in the Australian financial services sector. With Challenger's A$127 billion in assets under management, this deal solidifies State Street's position as a major player in the region. The transition of approximately 100 Challenger employees to State Street indicates a substantial operational shift, potentially leading to cost savings and improved efficiency for Challenger.

From an investor's perspective, this move could enhance Challenger's competitive edge by leveraging State Street's advanced Alpha® platform. The integration of front-, middle- and back-office operations may result in streamlined processes and reduced operational risks. However, investors should monitor the transition process closely, as large-scale operational changes can sometimes lead to short-term disruptions.

Tech Expert

State Street's Alpha® platform represents a significant technological advancement in the asset servicing industry. By integrating front-, middle- and back-office functions, it offers a comprehensive solution that can potentially reduce operational complexity and enhance data consistency across the investment lifecycle. For Challenger, adopting this platform could lead to improved operational efficiency and better decision-making capabilities.

However, the implementation of such a large-scale system comes with inherent risks. Investors should pay attention to how smoothly the transition occurs and whether there are any initial hiccups in data migration or system integration. Long-term success will depend on Challenger's ability to fully leverage the platform's capabilities and adapt its processes accordingly.

Market Research Analyst

This partnership signals a growing trend in the financial services industry towards outsourcing non-core functions to specialized providers. For Challenger, this move allows them to focus on their core competencies in investment management and annuity products. The deal also highlights the increasing importance of technological capabilities in attracting and retaining large institutional clients.

From a market perspective, this partnership could potentially reshape the competitive landscape in Australia's asset servicing sector. State Street's expanded presence may put pressure on other custodians and administrators to enhance their offerings. For investors, this trend towards consolidation and specialization in the industry could lead to improved services and potentially lower costs in the long run.

SYDNEY--(BUSINESS WIRE)-- State Street Corporation (NYSE: STT) today announced that it has been selected by Challenger Limited, a publicly listed Australian investment management firm, to provide custody and, through State Street Alpha^®, back-, middle- and front office investment administration services, for a suite of listed and unlisted investment vehicles with A$127 billion¹ in assets under management.

In this new client relationship, State Street will be the custodian and investment administrator for the entire Challenger group, comprising funds management that includes the multi-affiliate platform Fidante, fixed income platform Challenger Investment Management, and Challenger Life, the leading provider of annuity products in the Australian market.

“This partnership is very important for State Street,” said Stefan Gmuer, head of Asia Pacific and head of Strategic Business Growth at State Street. “The mandate reaffirms our front to back proposition which brings value, scale and efficiency to our clients who are looking to accelerate their own growth and transformation. It also further cements our position as a leading provider of choice for large, sophisticated transactions.”

Challenger will be one of the largest investment managers in the region to deploy the State Street Alpha^® platform, an asset servicing platform integrating the front, middle and back office from a single provider.

“State Street has a strong track record in servicing investment managers and institutional clients,” said Nick Hamilton, managing director and chief executive officer of Challenger. “Their leading technical capability, platform investment and global footprint will support our business and affiliates to help execute on the significant opportunity ahead, at the same time as delivering a high-quality service and innovation for our affiliates and clients.”

With this mandate, approximately 100 Challenger employees will transfer to State Street in October, after a period of consultation. They will continue to focus on investment administration services support for Challenger’s suite of listed and unlisted investment vehicles.

David Mackaway, the current chief executive officer of Artega, a venture which is majority-owned by Challenger, and members of his management team will also be joining State Street. Mackaway has more than 25 years of experience in the asset servicing and investment management industry and will bring tremendous expertise to State Street’s Australian business and the firm at large.

“As we welcome Challenger as a new partner, we are excited to be adding a large number of talented and experienced investment management and fund administration professionals to our team here in Australia,” said Tim Helyar, Australia country head at State Street. “By growing our talent pool, we are enhancing our capacity to meet and exceed the increasingly complex needs of our clients in Australia. We will continue to invest and strengthen our servicing capability as part of our commitment to the Australian market.”

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $44.3 trillion in assets under custody and/or administration and $4.4 trillion* in assets under management as of June 30, 2024, State Street operates globally in more than 100 geographic markets and employs approximately 53,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

*Assets under management as of June 30, 2024 includes approximately $69 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.

© 2024 State Street Corporation

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our selection as Challenger’s service provider for custody and, through State Street Alpha, back-, middle- and front office investment administration, as well as regarding our business, strategy, growth and sales prospects, the financial and market outlook and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “will,” “expect,” “intend,” “aim,” “outcome,” “future,” “strategy,” “objective,” “plan,” “believe,” “anticipate,” “seek,” “may,” “trend,” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements. Important factors that could cause actual results to differ materially from those indicated by any forward-looking statements include that State Street’s appointment as Challenger’s service provider remains subject to final definitive contract and documentation and other factors set forth in our 2023 Annual Report on Form 10-K, our subsequent SEC filings and our news release and slide presentation accompanying our second quarter 2024 earnings announcement in which the servicing mandate referenced in this news release is included. We encourage investors to read these materials, particularly the sections on risk factors and the endnotes, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this news release should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this news release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.

¹Source: Magenta, as of June 30, 2024

View source version on businesswire.com: https://www.businesswire.com/news/home/20240904023459/en/

Media:

Ed Patterson

epatterson@statestreet.com

+1 (404) 213-3106

Kate Cheung

kate.cheung@statestreet.com

+852-3556-1103

Source: State Street Corporation

FAQ

What services will State Street (STT) provide to Challenger ?

State Street will provide custody and investment administration services, including back-, middle-, and front-office operations through its Alpha® platform for Challenger 's A$127 billion in assets under management.

How many Challenger employees will transfer to State Street (STT)?

Approximately 100 Challenger employees will transfer to State Street in October 2023, after a period of consultation.

What is the significance of David Mackaway joining State Street (STT)?

David Mackaway, current CEO of Artega, brings over 25 years of experience in asset servicing and investment management, which will enhance State Street's expertise in the Australian market and globally.

How does this deal impact State Street's (STT) position in the Australian market?

This partnership strengthens State Street's position as a leading provider in Australia, enhancing its capacity to meet complex client needs and demonstrating its commitment to the Australian market.