Bidding war breaks out for Insignia Financial
Bain’s latest bid for Insignia Financial has been topped by a new tilt from CC Capital for the listed wealth group.
A bidding war over ASX-listed wealth and advice operation Insignia Financial is heating up, with CC Capital lobbing another bid, at $4.60 per share, at a 30c premium to its last tilt on January 3.
The latest offer comes after Bain Capital also topped its first bid for Insignia Financial with a new bid over the weekend, offering $4.30 per share for the beat-up wealth manager.
The flurry of offers comes after Bain Capital first tossed a $4 bid at Insignia Financial’s shareholders on December 12.
The latest tilt from CC Capital is subject to the same terms of its initial offer, adjusted for any dividends paid or payable after today’s bid.
The $4.60 bid comes at a 7 per cent premium to CC Capital’s and almost 15 per cent higher than the original offer from Bain in December.
This values Insignia Financial at more than $3bn, with shares trading around $4.43 at market close on Friday, 6.49 per cent higher.
The latest offer is almost double Insignia Financial’s share price in September last year.
Insignia’s board said it and its advisers were considering the latest revised offer from CC Capital, a New York-based private equity operation.
The US-based CC Capital Partners is led by former Blackstone senior executive Chinh Chu.
However, they told investors there was “no certainty that the CC Capital Revised Indicative
Proposal will result in a binding offer or that any transaction will eventuate”.
“IFL shareholders do not need to take any action at this time,” the company said.
“Insignia Financial will continue to keep the market informed in accordance with its continuous disclosure obligations.”
Insignia Financial, formerly known as IOOF, is being advised by Citigroup and Gresham Advisory Partners on financial matters, while King & Wood Mallesons has been engaged for legal advice.
Any potential buyer will have to navigate the Australian Prudential Regulatory Authority for approval, with industry watchers warning the regulator was on watch over superannuation trustees.
Bain has attempted to woo investors with an offer to roll their stakes into an unlisted vehicle, potentially allowing them to retain exposure to a privately-held Insignia Financial.
Brookfield is also understood to be weighing a bid for Insignia Financial, in what may prove to be a three-way showdown for the group.
However, Insignia has cautioned it has not yet seen a bid from Brookfield, after the ASX called on the company to come clean on any approach.
CC Capital’s hunt of Insignia Financial comes after the private equity players’ loss of an earlier bidding war for wealth manager MLC in 2021, when the storied retirement business was picked up in a $1.4bn deal by Insignia Financial.
NAB offloaded MLC after first buying the business in a $4.5bn deal with Lendlease in 2000.
Insignia Financial has touted plans to relaunch MLC this year as part of a major push to reinvigorate its disparate operations.
Insignia Financial also acquired ANZ’s wealth management business in 2017 in a $975m deal.
The group’s rapid string of acquisitions has seen the ASX-listed operation struggle on the market, with a vast number of shares issued to fund its purchases.
This has seen the group become a target for former Credit Suisse banker John Wylie’s Tanarra Capital.
Mr Wylie’s investment house has picked up a 15.2 per cent stake in Insignia Financial, with the banker now positioned to win big from any deal.
Tanarra had branded Bain Capital’s bid as “highly opportunistic”, cautioning Insignia Financial boss Scott Hartley should push forward with his plans to transform the business.
Insignia has plans to drive $200m in net cost savings over the coming four years, while growing the Shadforth and Bridges advice businesses.
Morgan Stanley analyst Andrei Stadnik has warned Insignia Financial was unlikely to deliver dividends over the coming two years.
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