NewsBite

CC Capital’s $2.9bn Insignia bid trumps Bain offer

The wealth manager’s share price has rocketed after receiving a higher takeover offer from US-based CC Capital Partners.

Insignia Financial CEO Scott Hartley took charge in March last year. Picture: Arsineh Houspian.
Insignia Financial CEO Scott Hartley took charge in March last year. Picture: Arsineh Houspian.

ASX-listed wealth manager Insignia Financial may face a tug of war for control between rival suitors after private equity group CC Capital Partners made a $2.9bn takeover bid.

The bid, which exceeds an earlier offer from Bain Capital, offers shareholders $4.30 per share in cash for control of Insignia Financial or the alternative of being rolled up in an unlisted company and retaining a holding in the firm.

Bain on December 12 offered Insignia shareholders $4 cash per share.

The board rubbished the offer six days later, warning it undervalued the ASX-listed operation.

The CC Capital Partners deal offers a 7.5 per cent premium to Bain’s tilt, and it sent the target’s shares soaring on Monday to a near 40-month high of $4.06.

The offer is the first major takeover play in Australian markets this year and the third bid by CC Capital Partners for storied wealth manager MLC, which is now a subsidiary of Insignia.

CC Capital Partners lost out to Insignia in a bidding war for MLC in 2021, when it was sold by National Australia Bank for $1.4bn.

NAB had earlier picked up MLC from Lendlease in 2000 in a deal valued at $4.5bn.

Insignia Financial has plans to relaunch the MLC brand this year as part of a five-year strategy.

Insignia Financial, which oversees more than $301bn in funds, on Monday said its board and advisers were considering the CC Capital Partners bid “to assess whether it is in the best interests of shareholders”.

“There is no certainty that the indicative proposal will result in a binding offer or that any transaction will eventuate,” the company said.

The offer is subject to a number of conditions, including completion of due diligence at Insignia Financial, which provides superannuation and investment solutions and advice to Australians.

The potential deal requires approval from the Foreign Investment Review Board as well as the Australian Prudential Regulation Authority.

Insignia Financial has engaged Citigroup and Gresham Advisory Partners to assist in considering the bid, while King & Wood Mallesons is acting as legal adviser.

CC Capital Partners is being advised by Deutsche Bank as well as legal counsel from firms Ashurst and Skadden, Arps, Slate, Meagher & Flom.

The US-based CC Capital Partners is led by former Blackstone senior executive Chinh Chu.

Chinh Chu is the founder and senior managing director of CC Capital.
Chinh Chu is the founder and senior managing director of CC Capital.

The latest takeover offer marks an attempt by CC Capital Partners to secure a foothold in Australia’s growing pension market, with sources suggesting the firm was taking a long view on ownership of the beleaguered Insignia Financial.

The firm, formerly known as IOOF, has seriously underperformed the market, with shares down more than 50 per cent over five years.

Atlas Funds Management chief investment officer Hugh Dive said the latest interest from CC Capital Partners could spark a bidding war with Bain.

But he warned the underlying assets of Insignia Financial were “pretty complex”, potentially complicating an attempt to extract value from any deal.

Mr Dive said Insignia Financial was facing a decline in asset quality, with earnings per share down.

The broader financial advice and wealth management sectors have been challenged by a pullback by Australians in the wake of the banking royal commission and the rise of index investing options, which have driven down management fees.

Mr Dive said Insignia Financial’s attempts to grow through the acquisition of MLC and ANZ’s wealth management business, bought in 2017 for $975m, were not “doing particularly well”.

“This was an excellent brand 20 years ago but there’s non-stop pressure on fees,” he said.

“We don’t own this, we have never owned this. It’s always looked in the far too hard basket.

“If I was an IFL shareholder I’d be happy to sit back and let a bidding war happen.

John Wylie. Picture: Fiona Byrne
John Wylie. Picture: Fiona Byrne

Insignia’s shareholders include former Credit Suisse banker John Wylie’s Tanarra Capital, which has a 15.2 per cent stake, and Tasmanian millionaire Bruce Neil with 4.01 per cent.

Barrenjoey analyst Andrew Adams warned in December that Bain Capital bid was “opportunistic” and said Insignia Financial was worth $4.30 – equivalent to CC Capital’s offer. He said Insignia Financial offered a “significant potential valuation upside”.

Tanarra also branded Bain Capital’s bid as “highly opportunistic”, saying Insignia Financial boss Scott Hartley should “remain focused on the business improvement plan they are in the early stages of delivering”.

Insignia has plans to drive $200m in net cost savings over the coming four years, while growing the Shadforth and Bridges advice businesses.

The wealth and advice sector hopes recent reforms by the Albanese government will open the door to grow customer numbers after years of retreat.

Financial Services Council policy executive director Chaneg Torres said the reforms “provide a significant opportunity for consumers to receive more affordable and accessible advice”. “(Super) funds are well positioned to broaden out their member servicing offering through these reforms, including … digital advice channels,” he said.

“If the government gets these reforms right, then superannuation funds will be able to provide targeted, simple advice on simple superannuation and retirement topics at an affordable price point, based on information they have about a customer’s specific circumstances.”

Shares in Insignia Financial closed up 14.69 per cent at $4.06.

Originally published as CC Capital’s $2.9bn Insignia bid trumps Bain offer

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.heraldsun.com.au/business/cc-capitals-29bn-insignia-bid-trumps-bain-offer/news-story/07ddf80b76dc7ee466bbf9743c1b1ba2