Brookfield joins Insignia Financial’s $3bn bidding war

Insignia Financial boss Scott Hartley. Picture: Arsineh Houspian

Three bids now on the table for the $2.9bn Insignia Financial will likely lead to more mergers and acquisitions more broadly across the wealth management sector.

Brookfield’s $4.60 a share offer that has emerged on Wednesday for the $2.9bn group currently trading at the Canadian private equity firm’s offer price has raised hopes of a deal, but risks still loom large parties get spooked after due diligence.

But if Insignia is not to their liking, they may shift their interest to similar targets - Colonial First State for one, which is Insignia’s rival and partly owned by Kohlberg Kravis Roberts.

There’s been a growing amount of talk in the market this year that KKR could be preparing the company that it owns with CBA for an exit of its 55 per cent stake.

As is often the case in M&A situations, KKR may approach the bidders and say, how about taking a look at CFS instead?

And then there’s the Australian-listed AMP, which could also be attractive.

KKR would not be a suitor of Insignia itself given that NAB is Insignia’s main customer, which would be a conflict of interest surrounding its relationship with CBA.

Brookfield’s $4.60 per share offer disclosed on Wednesday matches that already on the table from Bain Capital, advised by Bank of America, and CC Capital, which is advised by Deutsche Bank.

The understanding is that Brookfield, advised by Jarden, would call on Insignia’s current chief executive, Scott Hartley, and his management team, to run the business should it wind up with the company.

Insignia, advised by Citi and Gresham, told the market on Wednesday that it would provide Brookfield with non-public information.

The due diligence phase has begun for the other two suitors, and some market experts believe that when parties look under the bonnet of what they say is a business where former acquisitions are yet to be integrated, they could walk away or lower their offers.

There’s also regulatory risks.

The wildcard is John Wylie, whose business Tanarra owns 14 per cent of Insignia and may hold out for more money, with mixed messages out in the market on Tanarra’s position.

Brookfield, which owns the Australian non-bank lender La Trobe Financial, has a global financial services technology fund that would house Insignia and moved now because the company was prepared to open its books with other suitors interested.

It’s worth remembering that when Brookfield bid for AGL Energy and Origin Energy in 2023, it did not wind up with those businesses, but its interest in the space did lead to another deal – the purchase of a 53.3 per cent stake in renewable energy developer Neoen in an acquisition that valued the global group at about $US10bn.

Meanwhile, Brookfield’s adviser Jarden reported $NZ183m of third quarter revenue and $NZ67m of earnings before interest, tax, depreciation, amortisation and bonuses, up from $NZ132m and $NZ22m respectively in the previous corresponding period.

Operating expenses fell slightly to $NZ101m from $NZ110m.

It came on the back of an increase in corporate finance revenue with advisory transactions for Incitec Pivot, Potentia and Oaktree, among others.