☕️ Peppered with Doubt

Good morning.

Annuities giant Challenger’s move to acquire a 25% stake in non-bank lender Pepper Money received a frosty reception from sections of the market, with shareholder Wilson Asset Management and analysts from Barrenjoey and Macquarie questioning the logic of any deal, reports Capital Brief.

Barrenjoey analysts flagged in a research note that “at a high level, acquiring a non-bank lender is not how [Challenger] shareholders want their excess funds spent”.

While Macquarie analysts noted: “Should this proceed, there is now significant downside risk to the quantum of CGF's buy-back, which the investment community had anticipated to be in the range of $1.0b-$1.2b. This was the primary buy-thesis for CGF”.

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Market movers

Shares in Car Group climbed almost 10% Monday after it reported a 16% increase in adjusted first-half profit to $196 million and raised its interim dividend to 42.5 cents per share.

The quick sync

• EY is embedding AI in its services as enterprise demand grows and says just half of Australian companies have a plan. (Capital Brief)

• Australia’s weak productivity is capping growth and fuelling inflation, making supply-side reform critical to lift the economy’s speed limit, Paul Bloxham writes.(Capital Brief)

• Telstra wants Canberra to block spectrum fee hikes it says threaten investment, jobs and prices. (Capital Brief)

• The big banks are in an AI arms race, scrambling to prove they’re not being left behind. (Capital Brief)

Trading floor

M&A

• Pepper Money jumps on takeover offer as Challenger weighs 25% stake acquisition. (Capital Brief)

• Perpetual advances in wealth unit sale talks with Bain Capital. (AFR)

• Ironbark Asset Management is close to securing a major global backer to support its M&A plans. (AFR)

• Ramsay to sell European hospital stake, demerger unlikely. (The Australian)

• Alliance Nursing goes up for sale with McGrathNicol’s guidance. (AFR)

• Zara billionaire backs Macquarie’s $11.6b Qube bid. (AFR)

• IAG rumored to consider $4–5.5b sale of insurance unit. (The Australian)

Capital Markets

• Car Group shares surge after 16% profit jump and dividend boost. (Capital Brief)

• Bravura lifts FY26 revenue and EBITDA guidance ahead of results. (Capital Brief)

• Seek to take $356m impairment on Zhaopin investment ahead of HY26 results. (Capital Brief)

• Lenders push for receivership of Gupta’s Tahmoor mine. (AFR)

• Argo boosts HY profit and dividend despite weaker portfolio returns in volatile markets. (Capital Brief)

• MLC blocks Magellan global equities funds after executive resignation. (AFR)

• Web Travel Group rallies after reaffirming FY26 guidance despite Spanish tax audit. (Capital Brief)

• KKR presses on with Australian investments after GenesisCare losses. (The Australian)

• Firmus secures $14b debt deal to supercharge its national AI data centre expansion. (Capital Brief)

• Western Union eyes OFX amid strategic review. (AFR)

• Future Generation Global declares 4 cents fully franked final dividend, lifts total 2025 payout by 49%. (Capital Brief)

• Big Australian banks accelerate AI adoption with new tools, sparking a competitive “AI race” across the sector. (Capital Brief)

• Australian household spending fell 0.4% in December but remained 5% higher than last year. (Capital Brief)

• FIIG Securities fined $2.5m for cyber security failures exposing 18,000 clients’ data. (Capital Brief)

• PMET Resources launches $110m capital raise. (AFR)

• Challenger’s $300m Pepper Money stake sparks doubts over share buybacks. (Capital Brief)

• AI rivalry took center stage at the 2026 Super Bowl, with OpenAI and Anthropic exchanging ads. (Capital Brief)

• Telstra warns high spectrum fees could raise costs and jeopardize investment. (Capital Brief)

• Alphabet’s $15b bond sale sees $100b+ in demand. (AFR)

• eSafety to test Roblox safety measures amid child exploitation concerns. (Capital Brief)

• EU warns Meta over blocking rival AI bots on WhatsApp. (Capital Brief)

• Optus outage leaves 60,000 customers without mobile service. (Capital Brief)

• Novo Nordisk sues Hims & Hers over copycat obesity drugs. (Capital Brief)

• Weak productivity is capping Australia’s growth; more investment and reform are needed. (Capital Brief)

• EY centers consulting on AI as companies ramp up tech transformation. (Capital Brief)

• Blue Owl’s co-founders pledged USD1.9b in shares ahead of a record stock plunge driven by concerns over private credit. (Bloomberg)

• Ferrari and Jony Ive unveil the Luce, an electric vehicle that rejects screen-heavy trends for a tactile, driver-focused interior. (Bloomberg)

• As AI enters surgery, reports of botched procedures and misidentified body parts raise alarms for patients and regulators. (Reuters)

• MrBeast’s Beast Industries to buy Gen Z-focused banking app Step Mobile. (The Information)

• Alphabet lines up 100-year sterling bond sale. (FT)

VC 

• AI startup Neara hits $1b valuation. (AFR)

• Splose raises $46m to scale allied health care with AI and expand overseas. (Capital Brief)

• AI call-centre startup Operata hits $100m valuation. (AFR)

• AI consulting substitute Fluency raises $9m seed led by Accel at a $30m+ valuation. (Capital Brief)

People moves

• HESTA CEO Debby Blakey to step down in 2026 after 11 years, leaving a $100b-plus fund and key sustainability and digital initiatives. (Capital Brief)

• Michael Grimes returns to Morgan Stanley after Trump administration stint, as banks vie for the SpaceX IPO. (FT)

The watercooler