Hot on the heels of the Insignia Financial bid, experts believe rival licensee AMP and technology firms could be next on the list for private equity firms looking to enter the Australian market.
Last week, it was announced that Insignia has received an preliminary indicative proposal from US private equity giant Bain Capital to acquire 100 per cent of the business for $4 per share.
The deal is said to be “hard to resist” for shareholders who have seen their share price dwindle around $3 lately, with Insignia shares down by 51 per cent over the last five years.
It is also likely to be the first in many deals next year as US firms explore the Australian market in search of deals.
Colin Williams, founder of Wealth Data, said if Insignia rejects the bid, then AMP could be their next target. The US firm Bain Capital has already opened two offices in Sydney and Melbourne, demonstrating a commitment to investing in Australia and its advice market.
“AMP used to be the jewel in the crown but the share price has seen a slow and steady road downhill and has delivered nothing but disappointment unfortunately,” Williams said.
AMP Financial Planning also recently lost its title of the largest individual licensee to stockbroking and wealth management firm Morgans Financial which has 430 advisers compared to AMP’s 429.
However, James Chown, partner in financial services M&A at Deloitte, disagreed, given AMP has already divested its advice arm to Entireti earlier this month. This saw it sell its three advice divisions and self-licensed offering Jigsaw to Entireti for $10.2 million and minority stakes in 16 advice practices to AZ NGA for $82.2 million.
“AMP is a different business to Insignia, it has a banking arm and other components which would add a layer of complexity,” he said.
While he was not expectant of a bid for AMP, he said he was certain that 2025 would see more M&A activity across financial services.
“We don’t really expect that [interest] to slow down. Strong cash flow-generating businesses is an attribute that shareholders want and private equity has the capital to fund.”
A spokesperson for AMP said the firm does not comment on market speculation regarding whether it has received its own private equity bid in recent years.
While shares in AMP have declined over the last few years, they have risen by 70 per cent over the past 12 months. The firm attributed this to repositioning the group’s portfolio, including the advice divestment.
“There are a number of factors that influence the share price over the course of a year. We are focused on delivering on our strategy to build value. We have repositioned the portfolio and are driving growth across our wealth businesses, as seen in our Q3 results.
“We have been meeting our cost commitments, executed on a new partnership for the advice business, and completed the return of $1.1 billion of capital to shareholders. Alongside progress towards the launch of our new digital bank, these milestones demonstrate continued delivery of our strategic commitments and ongoing momentum.”
Meanwhile, Angus Woods, founder at Adviser Ratings, said he expects to see M&A play out in the platform and the technology software marketplace.
He referenced the $20 million investment previously made by Bailador into DASH in July 2024 which was topped up with a further $10 million invested in October 2024 as an example of recent technology backing.
“If the conversations I’m hearing in the market play out, then 2025 M&A activity is going to be pretty strong. This will be a positive at least for practice owners and for technology providers. There will be some interesting activity there, especially in the software space such as Iress and its Xplan tools.
“With the commoditisation of technology and AI, the reduction in technologies and the efficiencies from that are interesting and that’s likely what Bain Capital are seeing with Expand.
“You will get two margin plays here in the separately managed account (SMA) play and the tech efficiency margin play which will make advisers very excited for the next three years as they start to think about what that means for their profitability.”
