The board of Insignia Financial has reached a decision regarding the possible acquisition of the firm by US private equity giant Bain Capital.
Last week, it was announced that the licensee had received an indicative offer from Bain to acquire 100 per cent of the company for $4 cash per share, representing a value of $2.7 billion.
Bain Capital is a US private investment firm specialising in private equity and venture capital, with US$185 billion ($290 billion) in assets under management and offices in Melbourne and Sydney.
In an announcement on 18 December, Insignia told the ASX that the board has rejected the deal.
“The Insignia Financial board believes, based on its view of the fundamental value of Insignia Financial, the proposed transaction does not adequately represent fair value for shareholders in the context of a change in control transaction and that is not in the best interest of Insignia shareholder to engage with Bain Capital in relation to the indicative proposal.”
However, M&A experts told Money Management that Bain or another rival player may well come back with a higher offer, having already completed the due diligence on the business.
James Chown, financial services M&A partner at Deloitte, said: “It’s been rumoured that there has been PE interest in Insignia for a long time. The board obviously needs to evaluate the opportunity and what that means for shareholders, and then there might be flow-on consequences for other participants in the market as a result.
“Whether it was Bain or someone else, there’s been rumours about it for a while with different funds looking at it.”
Tony Beaven, financial services M&A expert, said: “If Bain puts in an offer and it’s rejected, they will just come back with another offer because they have already done the due diligence and the work. It’s going to be in the US newspapers now, so other firms will likely look at it too. They are gathering intelligence all the time.”
Shares in the firm have risen by 16 per cent since the announcement last week and are up by 53 per cent since the start of 2024, sitting in second place behind AMP for licensee share price growth.
During the year, new chief executive Scott Hartley has revamped the firm’s executive team and unveiled strategic priorities to maximise the benefits of scale and drive efficiencies to achieve around $200 million per annum in net cost savings by FY30.
