Bain Capital has pulled out of contention from acquiring ASX-listed Insignia Financial citing “macro uncertainty” caused by global capital market volatility.
Insignia Financial disclosed to the ASX on Wednesday morning Bain had pulled its bid with around a day remaining on the extended exclusivity due diligence period it had been granted.
Morningstar equity analyst Shaun Ler says there is a decent case for a more volatile market outlook, but with uncertainty now easing market conditions could remain relatively stable, should this trend continue.
He says credit spreads and the VIX Index, which gauges market volatility, have eased back to their three-year averages with that shift occurring in recent weeks due to the US softening its rhetoric on tariffs and a trade agreement announced with China last week.
“A few weeks ago, the landscape looked quite different,” Ler tells Professional Planner.
“There was still significant uncertainty, tensions between the US and China were unresolved, and had Bain Capital withdrawn under those conditions, it would’ve seemed likely that CC Capital might step back too.”
Insignia remain in discussion with CC Capital who have advised the group it continues to “actively work towards” making a binding bid in the coming weeks, but there is no guarantee the ongoing discussions will result in a final offer.
Both parties were granted exclusivity deeds to perform a full due diligence of six weeks, which was extended to 15 May after request from both parties.
Ler says if the underlying financial fundamentals of the business was struggling, the risk of CC Capital withdrawing its bid would be higher, but recent financial results point to a turnaround in earnings momentum.
“The business isn’t suddenly dominating the market or overtaking players like Netwealth or HUB24, but the fundamentals are improving, and that’s a meaningful shift,” Ler says.
On 7 March, Insignia received competing non-binding proposals from Bain and CC Capital to acquire all shares at a price of $5 per share.
The $5 share price was an increase of 8.7 per cent from the $4.60 per share offers previously made by both parties.
The latest figure represented a premium of 63 per cent of the closing price of Insignia shares on 11 December 2024 of $3.06, which was the last trading day prior to the first proposal from Bain.
Bain launched its first bid on 12 December for $4 a share and rejected later that week.
Competition from CC Capital came in the new year with a $4.30 per share bid, which was later matched by Bain.
A third player, Brookfield Capital Partners (UK), added another bid in February for $4.60 per share only to pull out when Bain and CC Capital each raised their offers to $5 a share, granting the current due diligence period.
The bidding war came less than a year after the appointment of CEO Scott Hartley, who took over from Renato Mota after the group’s share price languished despite attempts by Mota to reposition the company in the post-Hayne royal commission world.
Hartley, the former Sunsuper CEO who had joined AMP during their own post-Hayne rebuild under CEO Alexis George, announced a re-structuring project only a few months into his tenure.
But the group has faced headwinds due to remediation and class action lawsuits from legacy issues, as well as the integration of post-Hayne acquisitions from the big four banks.
