What price competing Insignia PE bids?

ANALYSIS

The future ownership of Insignia Financial will be decided both in the quantum and at the margin of the competing and almost identical bids of private equity players, Bain Capital and CC Capital Partners.

Both PE firms have pitched non-binding indicative offers of $4.60 per share for Insignia and, not surprisingly, the Insignia board has granted both companies the opportunity to do limited due diligence to determine whether either, or both, will then sweeten their proposed deals.

Barely an hour after announcing the upgraded Bain Capital bid yesterday, Insignia released its December quarter update to the Australian Securities Exchange (ASX) the contents of which confirmed why two significant PE companies see value in investing to gain control.

The quarterly update provided further confirmation that Insignia under the leadership of chief executive, Scott Hartley, had substantially turned the corner after bedding down its acquisition of the ANZ Pensions & Investments business and MLC Wealth.

The quarterly data portrayed a company attracting solid inflows across its businesses against a background of having substantially reduced costs.

The data points emphasised in the Insignia quarterly update were:

Funds Under Management and Administration (FUMA) increased by $7.2 billion (+2.2%) to $326.8 billion as at 31 December 2024

• Total net inflows for the quarter were $2.3 billion, driven by:

o $564 million net inflows into MLC Expand

o $577 million net inflows into retail Asset Management, and

o $2.0 billion institutional net inflows into Asset Management

o partly offset by outflows from Master Trust and legacy Wrap products

• Successful IT separation of MLC from NAB achieved during the quarter
• Vision2030: announced strategy to become Australia’s leading and most efficient wealth management company by 2030
• Plan to simplify and transform Master Trust business unveiled: initial agreement with SS&C Technologies

Importantly, Insignia’s so-called Vision2030 strategy has, at its core, the ambition of achieving net savings of around $200 million in annual business as usual operating costs by the 2030 financial year.

The competing Bain Capital and CC Capital Partners bids reflect a pragmatic that Insignia is not shooting blind on its Vision2030 strategy.