Morningstar not writing off Insignia PE sale

Mike Taylor

Managing Editor/Publisher, Financial Newswire

16 May 2025

In what represents a pragmatic assessment, research and ratings house Morningstar has stopped short of writing off the likelihood of Insignia Financial being sold to remaining private equity bidder, CC Capital but has downgraded the likely buy price.

Immediately following Wednesday’s announcement by Bain Capital that it was pulling out of its bid for Insignia, Morningstar senior analyst, Sean Ler opted not to join the ranks of those suggesting that the game was up for a successful PE bid.

Ler acknowledged that Insignia’s share price had plunged on the Bain announcement but said Morningstar believed it was too early to conclude that CC Capital would also withdraw.

He said the market volatility cited by Bain had moderated, the US and China roll back of tariffs had improved investor sentiment and with both the VIX index and credit spreads having fallen toward or below their three-year average capital markets cold return to more benign conditions.

Ler said that based on this, Morningstar lowered its fair value estimate for Insignia to $4.45 per share down from $5 per share, reflecting the reduced likelihood of a deal under current terms.

“We now assign equal probability to the deal succeeding or failing, with our stand-alone fair value at $3.90 per share,” he said.

The Morningstar assessment said that there was an equal probability of the deal succeeding or failing.

“CC Capital could proceed with its current terms if market volatility eases further and Insignia’s fundamentals remain solid, providing upside from the current share price,” Ler wrote.

“On the downside, CC could withdraw, particularly if the equity market takes a leg down, or if Insignia’s flows deteriorate significantly.

“With no competing bidders, CC could revise its offer lower, but we think its possible rather than probable.”