Australia’s financial firms are continuing to attract the attention of global private equity firms, with reports overnight hinting that a third bidder, Brookfield, is actively weighing a bid for Insignia, after two other firms threw their hats into the ring earlier.
Insignia denied the reports regarding Brookfield in an ASX listing on Friday.
The wealth manager said in a short statement to the ASX that it “has not received any proposal from Brookfield”, adding that in compliance with the exchange’s listing rules, it will “inform the market if or when there are material matters to disclose”.
According to The Australian, the global alternative asset manager with over US$900 billion in assets under management is considering a bid for the wealth firm to rival a pitch made by CC Capital Partners earlier this month. It reported, however, that Brookfield has yet to decide whether to make an indicative offer.
Insignia is currently assessing the bid made by CC Capital Partners on 3 January, having earlier rejected a Bain Capital offer after its board found it did not represent fair value for shareholders.
Bain Capital offered $4 per share to acquire 100 per cent of the company, while CC Capital Partners proposed a bid 7.5 per cent higher than Bain’s initial offer, and approximately 40 per cent above Insignia’s share price in early December.
Insignia’s shares closed 1.2 per cent lower on Thursday at $4.04; however, since the New York-headquartered firm made its bid, its share price had shot up from $3.54.
Earlier this week, Morningstar’s equity analyst Shaun Ler said the two bids received so far demonstrate Insignia is undervalued, particularly in light of future plans announced at the firm’s Investor Strategy Day last year.
Ler said: “The proposal vindicates our view that Insignia was undervalued, and that its earnings outlook is brighter versus its 2023–24 levels. The firm is recovering from past headwinds that hurt its ability to attract and retain client assets and improve profitability. These include the royal commission in 2018 and sharp rate rises of 2022–23.
“Margin expansion prospects are improving, driven by restructuring initiatives such as migrating client funds to more efficient platforms, reducing non-essential costs and an expected recovery in fund flows from cyclical lows.”
