Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, o1/o9/99, 01/07/00, 30/09/01,11/03/02, 01/01/03, 24/10/05, o1/o8/12, 04/03/13

Name of entity

Challenger Limited

ABN

85 io6 842 371

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1	+Class of 'securities issued or to be issued	Challenger Capital Notes 2, which are fully
		non-cumulative, convertible, paid,
		transferable, redeemable, subordinated,
		perpetual, unsecured notes to be issued by
		Challenger ("Notes"). The Notes are
		unsecured notes for the purposes of section
		283BH of the Corporations Act 2001
		(Cwlth).

z	Number of +securities issued or	Challenger intends to issue 4,500,000 Notes,
	to be issued (if known) or maximum number which may be issued	with the ability to issue more or less.

3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Please refer to the prospectus lodged with ASIC on 28 February 2017 ("Prospectus") (see the Terms of Notes at pages 99 to 127 of the Prospectus). This summary should not be relied upon in substitution for the terms set out in the Prospectus. Capitalised terms have the meaning set out in the Prospectus and the Terms.

Notes are fully paid, non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes to be issued by Challenger.

Holders will receive Ordinary Shares on Conversion of Notes on the Mandatory Conversion Date unless the Mandatory Conversion Conditions are not satisfied or Notes are not outstanding on that date.

Upon Conversion on a Mandatory Conversion Date, Holders will receive approximately \$ioi worth of Ordinary Shares per Note based on the VWAP (the volume weighted average price of Ordinary Shares) during a period of 20 Business Days on which trading in Ordinary Shares took place immediately preceding (but not including) the Mandatory Conversion Date. The VWAP that is used to calculate the number of Ordinary Shares that Holders receive will most likely differ from the Ordinary Share price on or after the Mandatory Conversion Date. This means that the value of Ordinary Shares received may be more or less than approximately \$ioi when they are issued or at any time after that.

The Mandatory Conversion Date will be 22 May 2025, provided the Mandatory Conversion Conditions are satisfied on that date. If any of the Mandatory Conversion Conditions are not satisfied on that date, the Mandatory Conversion Date will be the next Distribution Payment Date on which they are satisfied.

⁺ See chapter 19 for defined terms.

Challenger may with APRA's prior written approval elect to Exchange:

all or some Notes on 22 May 2023, the Optional Exchange Date;
all or some Notes after a Tax Event or a Regulatory Event; or
all Notes after a Potential Acquisition Event.

Exchange means a Note is Converted into Ordinary Shares worth approximately \$ioi, or Redeemed or Resold for \$loo.

Notes must Convert into Ordinary Shares on a Mandatory Conversion Date (subject to conditions being satisfied), on a Non-Viability Trigger Event or on an Acquisition Event (subject to conditions being satisfied).

If for any reason (including, without limitation, if Challenger is prevented by applicable law or order of any court or action of any government authority (including regarding insolvency, windingup or external administration)) Conversion of any Notes on account of a Non-Viability Trigger Event does not occur within five Business Days of the Non-Viability Conversion Date, then Conversion of the Notes will not occur and the Notes will be Written- Off with effect on and from the Non-Viability Conversion Date. This means that Holders' rights (including to Distributions) in relation to those Notes are immediately and irrevocably terminated. Holders will lose all of the value of their investments without compensation.

5 Issue price or consideration \$ioo per Note

⁺ See chapter ig for defined terms.

6	Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets)	Challenger intends to use the proceeds of Notes to fund a subscription for Additional Tier i Capital of CLC, the registered life company of the Challenger Group. Notes and Challenger's equity capital help to protect creditors of the Challenger Group by providing a loss-absorbing capital buffer that may support losses incurred by the Challenger Group. The contribution of Additional Tier 1 Capital to CLC will assist with funding the regulatory capital requirements of CLC resulting from annuity sales growth and will similarly help protect CLC's creditors and policyholders.
6a	Is the entity an +eligible entity that has obtained security holder approval under rule 7•1A?	No
	If Yes, complete sections 6b - 6h in relation to the +securities the subject of this Appendix A and comply with section 6i
6b	The date the security holder resolution under rule 73A was passed	N/A
6c	Number of +securities issued without security holder approval under rule 7.1	N/A
6d	Number of 'securities issued with security holder approval under rule 7.iA	N/A
6e	Number of +securities issued with security holder approval under rule or another 7.3, specific security holder approval (specify date of meeting)	N/A
6f	Number of +securities issued under an exception in rule 7.2	N/A

6g If +securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.
6h If +securities were issued under rule 7.iA for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A - complete Annexure 1 and release to ASX Market Announcements
7 +Issue dates

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

N/A

Date of entry into uncertificated holdings is expected to be 7 April 2017.

Holding Statements are expected to be dispatched by 12 April 2017.

⁺ See chapter 19 for defined terms.

8 Number and +class of all +securities quoted on ASX (including the 'securities in section 2 if applicable)

Number	+Class
571,672,427	Fully Paid Ordinary Shares
3,450,000	Capital Notes 1

9 Number and +class of all +securities not quoted on ASX (including the +securities in section z if applicable)

Number	+Class
NIL	N/A

io Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

N/A

Part 2 - Pro rata issue

U	Is security holder approval required?	N/A
13	Is the issue renounceable or non renounceable?	N/A
13	Ratio in which the +securities will be offered	N/A
14	'Class of +securities to which the offer relates	N/A
15	'Record date to determine entitlements	N/A
16	Will holdings on different registers (or subregisters) be aggregated calculating for entitlements?	N/A
17	Policy for deciding entitlements in relation to fractions	N/A
18	Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7.	N/A
19	Closing date for receipt of acceptances or renunciations	N/A
zo	Names of any underwriters	N/A
21	Amount of any underwriting fee or commission	N/A
ii	Names of any brokers to the issue	N/A
23	Fee or commission payable to the broker to the issue	N/A

⁺ See chapter 19 for defined terms.

24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders
25 If the issue is contingent on security holders' approval, the date of the meeting
26 Date entitlement and acceptance form and offer documents will be sent to persons entitled
27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
28 Date rights trading will begin (if applicable)
29 Date rights trading will end (if applicable) N/A
30 How do security holders sell their entitlements in full through a broker?
31 How do security holders sell part of their entitlements through a broker and accept for the balance?

N/A

N/A

N/A

32 How do security holders dispose of their entitlements (except by sale through a broker)? N/A
33 +Issue date N/A

N/A

Part 3 - Quotation of securities

You need only complete this section ifyou are applying for quotation of securities

34 Type of 'securities (tick one)

(b)

'Securities described in Part i

All other 'securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35	If the +securities are +equity securities, the names of the 20 largest holders of the additional 'securities, and the number and percentage of additional +securities held by those holders
36	If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1-1,000 000 1,001- 52 51001-10,000 10,001-100,000 1oo,00l and over
37	A copy of any trust deed for the additional +securities

⁺ See chapter ig for defined terms.

Entities that have ticked box 34(b)
-------------------------------------	--

38	Number of 'securities for which +quotation is sought	N/A
39	'Class of 'securities for which quotation is sought	N/A
40	Do the +securities rank equally in all respects from the 'issue date with an existing +class of quoted +securities?	N/A
	If the additional +securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
41	Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another 'security, clearly identify that other 'security)	N/A
42	Number and 'class of all +securities quoted on ASX the 'securities in (including clause 38)	Number N/A	'Class N/A

Quotation agreement

i +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
a We warrant the following to ASX.
The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
There is no reason why those +securities should not be granted +quotation.
An offer of the +securities for sale within la months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

Section 724 or section 1o16E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1o16F of the Corporations Act at the time that we request that the +securities be quoted.
If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section ioi9B of the Corporations Act at the time that we request that the +securities be quoted.
3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:

(Dior/Company secretary)

Date: 3. 03. 20i-p-

Andrew John Brown

Print name:

⁺ See chapter ig for defined terms.

AI assistant

CHALLENGER LIMITED Capital/Financing Update 2017

64641_rns_2017-03-02_51c7abca-6bca-4686-ac1c-afb7c3c7151d.pdf

Appendix 3B