Private equity firm Bain Capital has once again matched rival suitor CC Capital’s bid for Insignia Financial in a month-long takeover tug-of-war that is showing little signs of cooling down.
In an ASX announcement on Thursday, Insignia Financial said it had received another non-binding indicative proposal from Bain Capital of $4.60 cash per share, matching the offer from CC Capital received last Friday. The offers now value Insignia at $3.08 billion.
An Insignia quarterly earnings also released on Thursday showed that the group’s funds under management and administration (FUMA) across its platform, super and asset management business increased to $326.8 billion as at 31 December 2024, up 7.2 billion in the second quarter of FY25. Its superannuation FUM alone reached $132.3 billion.
Following Bain’s latest move, Morningstar analyst Shaun Ler noted that the offer “reinforced our thesis of Insignia’s improved earnings momentum compared with 2023–24 levels”.
“Platform net inflows and master trust net outflows over the six months to December 2024 were considerably better than expected. Strong performance by its investment funds and new product expansion efforts support further asset management net flows, something we underestimated,” he wrote in a note on Thursday, lifting the fair value estimate to $4.60 per share.
“The deal offers shareholders a smoother exit while avoiding Insignia’s various execution risks, such as required transformation investments, potential increases in remediation payments, and competition from faster-growing platforms.”
Insignia share price closed at $4.51 on 23 January, valuing the company at $3 billion.
Bain first launched its bid for Insignia after the market closed on 12 December last year with a price of $4 cash per share, but was swiftly rejected by the company board after a week, quoting that it “does not represent fair value” for shareholders.
Both Bain and CC Capital now have access to non-public company information to potentially formulate better offers.
“The provision of this information is subject to certain conditions, including the signing of an appropriate confidentiality and standstill agreement by Bain,” Insignia said.
Insignia Financial is amidst a dramatic transformation under chief executive Scott Hartley, who is coming up on his first work anniversary at the 179-year-old wealth and retirement savings manager.
Shortly before receiving Bain’s first bid, the group slashed its headcount by 25 per cent when it outsourced its superannuation administration service, by redeploying 1300 employees to its technology partner SS&C Technologies.
Insignia is also pursuing meaningful consolidation in its master trust business with the aim of bringing its scattered super funds onto one platform within two or three years. It installed former Australian Retirement Trust chief commercial officer Dave Woodall as the CEO of superannuation, and former AMP Super trustee director Sharon Suan as chief member officer. The latter led the reduction of AMP’s seven super funds into two.
Insignia’s super brands include MLC, Plum, IOOF and ANZ Smart Choice.
In other quarterly earnings statistics about the master trust arm, investment returns contributed $2.4 billion to inflows but there was a net outflow of $665 million and pension payments of $319 million.
Mandates with large employers, or what it calls workplace super, drove net inflows of $152 million. Direct acquisition channel attracted $62 million during the period.
The group lost $424 million of advised super assets but expected pricing changes to MasterKey suite of products to “improve retention and flows momentum”.
Insignia hired Citigroup and Gresham Advisory Partners as financial advisers and King & Wood Mallesons as legal adviser in takeover discussions.
*This article was updated after publishing with the latest Morningstar note.