Challenger's bidding power 'up to $5b'

Challenger chief executive Mike Tilley said two capital raisings, plus the recent $2 billion acquisition of Metlife's annuity book, had boosted Challenger's spending power considerably.

"We were probably stretching a bit to do much more than a $1 billion six months ago," Mr Tilley told an analysts briefing.

"Post the assumption of the Metlife portfolio and the capital raisings that we've just done in CIF (Challenger Infrastructure Fund) and the track record that we've developed with co-investors, maybe now we can do $4 billion or $5 billion transactions.

"And that multiplies the number of available transactions to us by a factor of four or five as well."

Mr Tilley said Challenger was seeing "lots and lots" of possible deals.

"We certainly have a strong preference for being able to negotiate an exclusive position rather than go into a long and often highly expensive auction process," Mr Tilley said.

"It doesn't mean we don't go into any auctions at all but yes we've seen a number of bigger transactions over the last 12 months.

"I was in Europe last week and the week before looking at one transaction there which we wouldn't have been able to do three months ago, but probably would be able to do right now.

"We probably won't pursue that one, but there are plenty of very interesting transactions around.

Like rivals Macquarie Bank Ltd and Babcock & Brown Ltd, Challenger's asset management division aims to buy global infrastructure and property assets and roll them into funds.

CIF went back to the market last week for another $262 million to help fund its buy-out of European storage company LBC Group.

The offer to shareholders followed a bookbuild in April that raised $138 million from institutions to help pay for the 565 million euro ($A900 million) LBC acquisition.

Challenger's other assets include a majority stake in United Kingdom gas and electricity utility Inexus, holdings in UK gas distributors Northern Gas Networks and Wales & West Utilities, and a holding in UK broadcasting services provider Arqiva.