News: CGF UPDATE 1-Apollo, Athene swoop on $539 mln stake in Australia's Challenger

(Adds details of stake purchase, share movement, and background)

July 7 (Reuters) - Retirement services provider Athene Holding Ltd ATH.N and private-equity firm Apollo Global Management APO.N acquired up to 18% of Australia's Challenger Ltd (CGF) for A$720 million ($539.42 million), the companies said on Wednesday.

The news sent shares of the Australia's largest provider of annuities soaring 13.7% in their sharpest rise in more than 14 months.

The two American companies, which are set to merge in an $11 billion all-stock deal, bought 15% from existing shareholder Caledonia Investments, Challenger said.

The remaining 3% is subject to approval from banking regulator Australian Prudential Regulation Authority.

According to a regulatory filing by Challenger, the pair had started picking shares in the market from May 24 until July 5.

Athene Chief Executive Jim Belardi said the investment was an opportunity to enter "a geography we have been studying, given the current economic conditions and compelling demographic fundamentals."

Challenger manages around A$21 billion of life investment assets and A$104 billion of total assets, as at March 31.

($1 = 1.3348 Australian dollars)