Is CC Capital’s Insignia interest real? Some aren’t convinced

Insignia Financial chief executive Scott Hartley. Picture: Arsineh Houspian

Is CC Capital a real bidder for Insignia Financial or a stalking horse?

It’s worth remembering that Insignia Financial’s boss, Scott Hartley previously worked for the private equity firm, so he would have strong connections there.

Is it possible that Insignia’s bankers urged CC Capital to enter the contest to walk Bain Capital up on price?

The situation takes one back to the days when Fairfax Media (now part of Nine Entertainment) was in play, whereby Hellman & Friedman appeared from left field to rival a takeover bid being made by TPG Capital, valuing the target at $3bn – which was slightly higher than that made by US-based bidder TPG which was first on the scene.

Hellman & Friedman never actually put forward a formal bid in the end, arousing suspicion about its role in the whole saga and just how serious it was to begin with, given its connection to Brian Powers.

Mr Powers was the former Fairfax chairman before becoming Hellman and Friedman’s chairman emeritus.

Where the Insignia Financial battle is up to now is that Bain Capital is offering $4.60 per share – its third offer.

That was after it lifted its bid to $4.30 per share on January 11 from $4 per share on December 12.

CC Capital joined the contest on January 3 by offering $4.30 per share then lifting the bid on January 17 to $4.60 per share cash.

But some market experts are surprised that the target has become the centre of a bidding war, suggesting that a number of its acquisitions made over the years are still to be fully integrated, lessening the appeal of the wealth manager which no one has bid for earlier and has been subject to a sharp share price decline.

The question is what firm offers turn up after the parties have carried out due diligence.

There’s some betting that once groups look under the bonnet, CC Capital walks away and Bain Capital revises its offer lower.

CC Capital was once interested in buying the MLC business from NAB – which was bought for $1.4bn in 2020 by Insignia Financial – but there’s still quite a bit of convincing to do around CC Capital’s conviction on Insignia Financial.