Bain matches CC Capital bid for Insignia

Just days after Insignia confirmed that, despite media speculation, it had not received a third takeover bid from Brookfield, its initial suitor has taken another swing.

In a release to the ASX on Monday morning, Insignia announced that it received a revised non-binding and indicative proposal from Bain Capital to acquire all of the shares in Insignia Financial by way of a scheme of arrangement at a price of $4.30 cash per share.

This is in line with the offer from New York-based firm CC Capital Partners last week and 7.5 per cent higher than Bain’s initial offer.

“The Revised Indicative Proposal represents a 7.5 per cent premium to Bain Capital’s original non-binding indicative proposal of $4.00 cash per share dated 12 December 2024 (Initial Bain Proposal) and represents a cash price per share the same as that proposed by CC Capital Partners LLC in its non-binding indicative proposal received on 3 January 2025 (CC Capital Proposal),” Insignia said.

“Bain Capital has also noted in its Revised Indicative Proposal that it is open to discussing a transaction structure that would provide Insignia Financial shareholders with an opportunity to receive a proportion of their total consideration as scrip consideration in the ultimate Bain Capital controlled holding entity of Insignia Financial.”

Insignia added that the revised proposal is subject to the same terms and the same conditions as the initial Bain proposal, and that the board and its advisers are “considering the revised indicative proposal in parallel with its consideration of the CC Capital Proposal”.

“There is no certainty that either proposal will result in a binding offer or that any transaction will eventuate,” it added.

Bain first attempted to acquire Insignia Financial in December with an offer of $4 per share, however the board decided this figure was not sufficient.

“The Insignia Financial Board believes that, based on its view of the fundamental value of Insignia Financial, the proposed transaction does not adequately represent fair value for IFL shareholders in the context of a change of control transaction and that it is not in the best interests of IFL shareholders to engage with Bain Capital in relation to the indicative proposal,” Insignia said at the time.

On Friday, Insignia announced to the ASX that Brookfield had not made an offer on the firm, despite reports that it was actively weighing a bid.

According to The Australian, the global alternative asset manager with over US$900 billion in assets under management is considering a bid for the wealth firm, however, it added that Brookfield has yet to decide whether to make an indicative offer.

According to Morningstar equity analyst Shaun Ler last week, 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.