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Bain Capital has matched the $2.88 billion offer by CC Capital Partners for Insignia Financial (ASX: IFL), setting the scene for a showdown between the US private equity groups for control of one of Australia’s largest wealth management companies.
Insignia has announced that Bain has upped its offer for the Melbourne-based group to $4.30 per share, matching the price put forward in an indicative bid announced by CC Capital Partners a week ago.
The revised offer from Bain follows the rejection by Insignia of its original bid price of $4 announced on 12 December which valued the group at $2.68 billion.
The latest move in the battle for control of Insignia follows speculation last week of a potential three-way tussle for the wealth management group, formerly known as IOOF Holdings.
However, Insignia has put an end to that rumour which was sparked by a report in The Australian that Canadian-US private equity group Brookfield was also planning to enter the fray. Insignia announced last Friday that it has not received any proposal from Brookfield.
While Bain Capital has matched CC Capital’s offer price, the suitor has not altered the terms of its original proposal.
Insignia points out that Bain Capital is open to a potential cash-and-scrip offer that would give Insignia Financial shareholders an opportunity to retain a smaller shareholding in the company under the control of Bain Capital.
“The revised indicative proposal is otherwise subject to the same terms and the same conditions as the initial Bain proposal,” says Insignia.
“The board of Insignia Financial, together with its financial and legal advisers, is 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.”
Insignia, which has $311 billion in funds under management and administration, operates the MLC financial services business and the Shadforth and Bridges advisory groups.
The company, which has forecast strong growth for its advisory business over the next five years, posted an underlying net profit after tax of $217 million in FY24 – up 13.6 per cent from a year earlier. Net revenue of $1.39 billion from continuing operations was up 1 per cent.
However, Insignia reported a net loss of $185.3 million for the year which was driven by a $222.5 million increase in remediation costs and penalties, $95.9 million increase in transformation and separation costs and a $47 million fall in earnings from discontinued operations.
The group allocated $269.6 million in remediation provisions in FY24, including $48.2 million relating to the court enforceable undertaking to the Australian Prudential Regulation Authority from OnePath Custodians including client remediation and infringement notices of $10.7 million.
Insignia last year also agreed to pay $22 million as part of a $50 million class action settlement in relation to the OnePath Custodians and OnePath Life superannuation.
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