Challenger's (ASX:CGF) deal to merge its Fidante asset management business with Channel Capital to create a larger investment platform is strategically consistent and a directionally positive move, Jefferies said in a note on Thursday.

The company will receive AU$172 million in cash and a 45% stake in the combined entity, Channel Group, which will have total assets under management of AU$150 billion, providing Fidante with a stronger opportunity to grow, the firm said.

The integration will allow for wider distribution through wealth advisers and high-net-worth clients, while increasing global presence and enhancing investment capabilities.

"While near-term financial impact is limited, the transaction materially improves the structural growth outlook, which should support valuation over time," analysts at the brokerage commented.

Jefferies maintained a hold rating and price target of AU$9.25 on Challenger.