Australian real estate investment firm Elanor Investors Group (ASX:ENN) has agreed to buy Challenger's $3.4B Australian real estate funds management business for a maximum $41.8m consideration.

The company says the deal will increase AUM (assets under management) from $3B to $6.4B.

Elanor's Chief Executive, Glenn Willis says this is a transformational transaction for Elanor:

"Combining Elanor's real estate funds management capability with Challenger's market leading capital raising platform delivers significant size and scale benefits, and positions us for further strong growth."