Insignia’s $2.9bn valutation sparks market shift amid private equity bidding war

The latest $2.9bn bid for Insignia Financial validates its long-held belief that the wealth giant has been undervalued by the market, according to researcher Morningstar.

US private equity firm CC Capital offered $4.30 per share, following Bain Capital’s $4 per share bid last month, which was ultimately rejected. 

CC Capital’s $2.9bn offer to acquire all of Insignia’s shares marked a 7.5% premium over Bain’s $2.7bn bid. Similarly, CC Capital’s bid represented a 21% premium over Insignia’s pre-announcement trading price of $2.19 per share and a 19% premium on Morningstar’s standalone fair value estimate of $3.60 per share.

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In 2017, Insignia’s stock was valued at over $10 but fell below $4.33 by the end of 2018. By November 2024, ahead of its investor day presentation, the share price had dropped to $3.29. Hence, new Insignia CEO Scott Hartley’s five-year strategy focused on cost reductions and efficiency, aiming to achieve $200m in annual savings.

Insignia exited its self-employed advice licensee channels, retaining its salaried licensees, Shadforth and Bridges. By 2030, it aims to increase the number of clients per salaried adviser from 100 to 140, projecting a rise in per-adviser revenue from $800,000 to between $1.1m and $1.3m as a key strategy for boosting overall revenue.

After CC Capital’s bid announcement, Insignia shares surged to a three-year high of $3.93, marking a 12% increase since late November 2021.

Source: Professional Planner

 

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