Ann: IFL Receives Indicative Non-binding Proposal, page-16

Brookfield makes it a three-way bidding war for takeover target Insignia Financial

Brookfield has matched offers from rivals Bain Capital and CC Capital for the wealth manager.

Cliona O'Dowd and Joyce Moullakis (SMH)

3 min read

February 5, 2025 - 3:50PM

Three suitors are now poring over Insignia’s books.

Insignia Financial is now entertaining a trio of suitors after Brookfield Capital Partners joined the fight for the wealth manager with a $4.60-per-share bid that matches offers from rivals Bain Capital and CC Capital -- and gets it a look under the hood of the takeover target.

Insignia on Tuesday said it would open its books to Brookfield in the hopes of enticing a higher offer from the suitor, a move that drove the share price up more than 7 per cent to $4.62 apiece, its highest point since September 2021. The share price moving above the $4.60 offer price indicates investors believe there is more to play out in the takeover tussle, but it could be weeks yet before any of the potential buyers ups their bid, if at all.

“In order to determine if Brookfield is able to formulate an improved proposal from that reflected in the indicative proposal, Insignia Financial will offer to provide to Brookfield a limited period of access to certain non-public information on a non-exclusive basis,” the wealth manager told shareholders.

Access is subject to certain conditions, including that Brookfield signs a confidentiality and standstill agreement.

Rivals Bain and CC Capital, meanwhile, already have a head start, with both given the same access to its books in recent weeks.

The Australian foreshadowed in early January that Brookfield was actively weighing a tilt for Insignia, despite concerns about a bidding tussle breaking out.

But as with Bain and CC Capital, ASX-listed Insignia cautioned on the uncertainty of any deal going ahead with Brookfield. “The provision of limited due diligence does not guarantee that the indicative proposal will result in a binding offer or one that is capable of being recommended by the board,” the company said.

Giving a third suitor a look under the hood could increase the bidding war that has seen the offer price for the wealth manager jump from the initial $4 a share Bain lobbed at Insignia in December.

CC Capital exceeded this initial bid earlier in January, lobbing an offer of $4.30 a share, which was quickly matched by Bain before CC Capital came back with the current high bid of $4.60, again matched by Bain and now by Brookfield.

Potential buyers, meanwhile, will need Australian Prudential Regulatory Authority approval, with industry watchers warning the regulator is on watch over superannuation trustees.

Brookfield’s interest in Insignia may be linked to a potential combination with another asset it owns here - La Trobe.

While La Trobe is a non-bank lender it also oversees fixed income credit funds for retail investors largely in residential property-backed loans. The company’s website points to $11bn being housed in La Trobe’s Australian credit fund and it has $20bn under management.

Brookfield is understood to have looked at broadening La Trobe’s credit fund into other areas of wealth and considers a purchase of Insignia as a way of accelerating that plan.

The interest from multiple suitors comes as the Australian dollar sits around US62c, well below its long-term average, making Australian assets more attractive to overseas buyers.

Ten Cap founder and lead portfolio manager Jun Bei Liu said Brookfield’s offer added tension to the takeover battle. Her fund holds shares in Insignia.

“It really depends on what comes out of the due diligence process but with Brookfield now entering, it certainly looks like the bidding tension is there now. Though at the moment there’s no reason for any of them to really show their hands,” she said.

Ms Liu expects each party to conduct due diligence for about four weeks, meaning CC Capital would already be at the halfway point.

The recent decline in the Australian dollar means the local wealth sector is now very attractive to offshore buyers, she added.

“We’ve got so much superannuation and wealth, and the market is not very developed compared to offshore. So there’s an incredible amount of opportunity in this industry dominated by some older players that could be refreshed,” Ms Liu said.

The move by Brookfield and Bain to match, rather than better, CC Capital’s offer, could also be viewed as a way of the private equity giants getting a look under the hood of the wealth manager as they potentially eye other takeovers in the local wealth space.

Another Insignia shareholder, who declined to be named, said: “It’s (Insignia) a systemically significant player in the Australian financial services scene. We clearly see there is value in the company over $5.”

Insignia is being advised by Citigroup and Gresham Advisory Partners on financial matters, while King & Wood Mallesons has been engaged for legal advice.

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