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Volatility in global capital markets has forced Bain Capital Private Equity to pull out of the battle to control Insignia Financial (ASX: IFL), one of Australia’s largest wealth management companies.
That leaves CC Capital Partners in the box seat with a bid that currently values Insignia at $3.35 billion – or $5 per share – just three months after the Australian group was facing a potential three-way tussle after Brookfield Capital Partners threw its hat into the ring in February.
Brookfield has since dropped out of the race, but Insignia last month granted both Bain Capital and CC Capital Partners an exclusivity period to firm up their proposals for the group, with that period set to expire tomorrow.
However, Insignia has announced today that Bain is unable to put forward a binding offer for the wealth management group “due to the macro uncertainty caused by the volatility in global capital markets”.
“Insignia Financial remains in discussions with CC Capital, which has advised that it continues to actively work towards making a binding bid for the company over the coming weeks,” says the company.
“There is no certainty that the ongoing discussions will result in any transaction being put to Insignia Financial shareholders for their consideration.”
The Insignia share price, which closed yesterday at $4, reflects this uncertainty. The company’s market value of $2.68 billion yesterday is $670 million less than the indicative price put forward by CC Capital Partners.
At yesterday's close the share price sat at the same level initially proposed by Bain Capital which began the bidding war late last year. Bain’s original $4-per-share offer was spurned by Insignia.
News of Bain abandoning the race sent Insignia Financial shares sharply lower this morning - with the stock slumping almost 15 per cent to $3.41.
Bain Capital and CC Capital Partners both increased their indicative offers for Insignia to $5 per share in March.
Insignia Financial, the wealth manager formerly known as IOOF Holdings, said at the time that it was in the best interests of shareholders to secure an exclusivity deed with both Bain and CC Capital to progress both of their proposals.
The company, which owns the MLC brand, has benefitted from a string of acquisitions in recent years that led to a 13 per cent increase in underlying profit after tax to $217 million in FY24.
Underlying net profit after tax rose 30 per cent to $124 million in the first half of FY25 as average funds under management and administration increased 8.6 per cent to $320 billion.
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