Bain’s Insignia move ‘a trigger for bidding war’

Insignia Financial manages and administers $319.6bn of funds

Observers believe Bain Capital’s $2.7bn offer for Insignia Financial will kickstart a bidding war for the Australian-listed wealth manager, with all eyes on Kohlberg Kravis Roberts.

Other names being touted as potential bidders include private equity firms CC Capital, TA Associates, PAG, EQT and Ares Management.

AMP, which is known to have had some interest in the business, and SS&C are thought to be unlikely suitors for now.

Some consider KKR a possible bidder because it owns 55 per cent of Insignia’s rival, Colonial First State, but others believe it’s a seller of CFS – so a deal would not make sense. Another possibility is that Bain bids for AMP and extracts synergies from both deals.

The market believes that Insignia is just starting to hit its straps, and perhaps Bain pre-empted buyer interest from its private equity rivals.

Investment in technology, stripping out costs and creating efficiencies has seen plenty of upside from the CFS investment for KKR, and some believe that Bain may now be trying to replicate its success.

John Wylie’s Tanarra, with 14 per cent, will be kingmaker in any buyout involving Insignia Financial, having tripled its holding since late 2022. In 2022, Insignia’s share price ranged from $3.43 to $3.80, and it has been trading at lower levels since.

Insignia, which manages and administers $319.6bn of funds, has been advised by Citi. Private equity firms have considered the company as a takeover target for some time.

Observers believe Boston-based Bain Capital is a credible buyer, but will need to up its $4-per-share offer to get shareholder approval and backing from the company.

Before the offer, Insignia shares on Thursday closed at $3.40, with its market value at $2.3bn.