Three months on from the first Insignia Financial bid from Bain Capital, what developments have taken place and how have the firm’s shareholders benefitted?
Last year, Insignia Financial announced a major five-year strategic project to become the leading wealth manager by 2030, maximise the benefits of scale and drive efficiency, as well as move away from previous M&A activity.
Chief executive Scott Hartley said: “Each of our four lines of business are individually strong and well-positioned. Our 2030 strategy is focused on how we will build on our strong foundations to leverage economies of scale and position for strategic and targeted growth, driving outcomes for our customers and shareholders.”
At the time of the strategy day, shares in Insignia were trading at $3.17.
However, just one month later, the firm became the subject of bidding war, with three US private equity giants all coming in to bid for the firm.
This began a period of intense scrutiny of the Australian financial advice industry by private equity players, and further M&A is forecast to take place this year.
Since the strategy day, shares have risen 41 per cent to trade at $4.48 as of 12 March.
Money Management explores the developments so far:
13 December 2024
The first indication of the upcoming M&A bidding war came with an unexpected indicative non-binding bid from US private equity giant Bain Capital for the firm at $4 cash per share by way of a scheme of arrangement.
Bain Capital is a US private investment firm specialising in private equity and venture capital with US$185 billion in AUM and offices in Melbourne and Sydney.
18 December 2024
The Insignia board rejected the Bain Capital deal, stating the board did not feel it represented fair value for its shareholders and it was not in the best interest of the firm to engage further with the offer.
3 January 2025
Coming back straight after the Christmas break, it was announced that a rival firm had emerged in CC Capital who made a higher bid of $4.30 per share. The news of a second bidder caused Insignia shares to spike by 14 per cent in one day.
CC Capital was founded in 2015 by Chinh Chu, the former co-head of private equity at alternative asset manager, Blackstone. If the deal was to go ahead, it would be the firm’s first major investment in the Australian market. The firm has a previous link with Insignia, having put in a bid to acquire MLC Wealth in 2021, which went on to be acquired by Insignia.
11 January 2025
Bain Capital was undeterred by CC’s competition and made a second bid at $4.30 per share, representing a 7.5 per cent premium to its original bid.
17 January 2025
CC Capital upped its offer to $4.60 per share, valuing the company at $3 billion, and a few days later on 20 January, Insignia granted the firm a limited period of due diligence on a non-exclusive basis in order to determine whether it would make an improved proposal.
23 January 2025
Determined to remain on par with its rival, Bain made its third offer for the firm with a matched offer of $4.60 per share which saw it also granted a period of due diligence.
5 February 2025
Just when it seemed the race was slowing, a third bidder emerged in the form of Brookfield. It had previously been rumoured in early January that the firm was exploring the possibility but an offer was not formally made until February for $4.60 per share, matching the Bain and CC Capital ones.
Brookfield is a global alternative asset manager with over US$900 billion in assets under management, specialising in real estate, infrastructure, private equity and credit. In 2019, the firm acquired the majority of Oaktree Capital, which also made its own entry into the Australian market with a $240 million investment in professional services firm AZ NGA.
20 February 2025
Insignia releases its half-year results showing a net loss after tax of $17 million and average funds under management and administration of $320 billion, with shares falling 2 per cent on the news.
Commenting on the M&A interest on a results webinar, chief executive Scott Hartley said he hoped to “expedite the process” and was confident of completing due diligence by the end of the month, with Insignia having provided information on its financials, strategy and deal with SS&C Technologies.
07 March
Bain Capital and CC Capital both announced they had made separate bids for $5 per share following the completion of due diligence, increasing the company’s valuation from $3 billion to $3.3 billion. With both bids matching, Insignia announced it had entered two exclusivity periods for extended due diligence.
No comment was made on the Brookfield bid, but there is the potential for further bids after the end of a four-week ‘no shop, no talk’ restraints. Due diligence is expected to last six weeks.
As of 12 March, shares are trading at $4.48, up 24 per cent since the first bid.
