Insignia takeover still on hold as PE bids dry up

In an ASX announcement on Monday morning, Insignia Financial provided the latest update on the drawn out saga of private equity firms trying to take control of the business, however it has provided little to inspire confidence that a deal will be made.

“The Board of Insignia Financial, together with its financial and legal advisers, is continuing to engage in discussions with CC Capital in connection with the Proposal,” according to the announcement.

“There is no certainty that the ongoing discussions will result in any transaction being put to Insignia Financial shareholders for their consideration.”

It paints an even less optimistic picture than the announcement three weeks ago, which indicated the acquisition process was still on track.

“CC Capital has informed Insignia Financial that it continues to actively work towards making a binding bid for the company,” Insignia said on 1 July.

“Specifically, CC Capital is finalising financing and investment committee approvals, a process that is expected to be completed in the next two weeks.”

The two-week projection for CC Capital to make a decision was slightly more concrete than the vague “coming weeks” that accompanied Insignia’s previous update, however that fortnight timeframe has come and gone without any movement.

In mid-May, the private equity bidder that kicked off the takeover process – Bain Capital – told Insignia it was no longer interested due to “the macro uncertainty caused by the volatility in global capital markets”.

During the due diligence process, which had been extended by a month from the original deadline, Insignia was also hit by a cyber attack that affected a small number of superannuation members on its Expand platform.

The bidding war for control of Insignia has been ongoing since December, when Bain made its first offer to acquire the company for $4 per share; however, the board decided this figure was not sufficient.

Since then, Bain and CC Capital had provided bids of $4.30, $4.60, and the latest offers of $5 per share.

Following the withdrawal, Morningstar analyst Shaun Ler said there was an “equal probability” that the remaining Insignia takeover bid would succeed or fail, while also knocking down the “fair value” estimate of the firm’s share price.

“We believe it’s too early to conclude that CC Capital will also withdraw, though the risk has increased. Market volatility – cited by Bain – has moderated in recent weeks. Constructive talks between the US and China to roll back tariffs have improved investor sentiment,” Ler said at the time.

“While we can’t rule it out, we think it’s less likely that Bain exited due to it identifying a fatal flaw in Insignia. We see the firm’s fundamentals improving, with better profitability from cost reductions, moderating net outflows and compounding of client flows.”

As a result, Morningstar had lowered Insignia’s fair value estimate from $5.00 in April to $4.45 and said the firm should see slower fee compression, steadier fund flows, and scalable cost reductions going forward.

Insignia shares reached a peak of $4.68 in March at the height of the bidding war, but have fallen to $4.17 ahead of the market opening on Monday morning. However, it is still almost double the price less than a year ago when it was trading at $2.26 in September 2024.