James Packer will be a happy camper after a solid rise in profit at his associated finance company, Challenger Financial Services Group which revealed a sharp, 90% rise in profit for 2007 and hopes of more to come in 2008.

Challenger said net profit rose to $255 million.

Mr Packer’s companies control around 20% of Challenger, while a surprise new substantial shareholder is Sydney solicitor, Chris Murphy, who owns 5.18%, or 28.597 million shares.

Challenger shares rose 32c to $5.32 after the profit was released, which will please all shareholders, especially Mr Murphy who seems to have bought in well above $5.20 a share.

This stake, held in the name of a company called Cardiac Jolt, is worth more than $142 million.

He also owns a substantial stake in struggling Australian Pharmaceutical Industries. The 8.93% stake is worth around $43.7 million. It too is held through Cardiac Jolt.

So Mr Murphy, who is still active as a solicitor specialising in high profile cases, has upwards of $188 million invested in both companies.

He stands to make more with two deals announced by Challenger today that will see investors from the US and Japan buying into the company at $5.20 a share or taking options at $7 a share.

A total of 90 million shares are covered by the two deals: one is an option, the other is a purchase at $5.20 a share, which will dilute Mr Murphy’s stake in Challenger if he doesn’t top up his holding.