Insignia seeks higher bid from CC Capital
Insignia Financial has granted CC Capital access to select company information in the hope of securing an improved offer from the private equity firm.
On 17 January, CC Capital made a revised bid for the firm for $4.60 per share, 7 per cent higher than its original offer. It had previously made an earlier bid of $4.30 but this was increased in light of rival bidder Bain Capital matching the bid last week.
In a statement on 20 January, Insignia told the ASX that it had granted CC Capital a period of access to certain information on a non-exclusive basis which would enable CC Capital to determine if it can make a higher bid.
“In order to determine if CC Capital is able to formulate a further improved proposal from that reflected in the CC Capital Revised Indicative Proposal, Insignia Financial has offered to provide to CC Capital a limited period of access to certain non-public information on a non-exclusive basis," the firm stated.
“The provision of this information is subject to certain conditions, including the signing of an appropriate confidentiality and standstill agreement by CC Capital.
“The provision of limited due diligence does not guarantee that the CC Capital Revised Indicative Proposal will result in a binding offer or one that is capable of being recommended by the board of Insignia Financial.”
The firm also noted it will release an update for its financial results for Q2 2024/25 on 23 January.
According to Morningstar equity analyst Shaun Ler, the bidding war “vindicates” the firm’s view that Insignia was undervalued, noting that Morningstar believes its “earnings outlook is brighter versus its 2023–24 levels”.
“The firm is recovering from past headwinds that hurt its ability to attract and retain client assets and improve profitability,” Ler said.
“These include the royal commission in 2018 and sharp rate rises of 2022–23. Margin expansion prospects are improving, driven by restructuring initiatives such as migrating client funds to more efficient platforms, reducing non-essential costs and an expected recovery in fund flows from cyclical lows.”
According to Morningstar, the new “fair value estimate” for Insignia is $3.95 per share, up from its previous number of $3.60, which Ler said reflected an “equal-weighted probability of Insignia being acquired by CC Capital or staying stand-alone”.
Both are considerably higher than what the firm was trading at prior to the takeover attempts started, with Insignia shares having climbed 35 per cent from $3.06 at the start of December to its current price of $4.10. It is also up around 15 per cent from $3.54 prior to CC Capital’s bid.
AUTHOR
Laura Dew
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