The 179-year-old owner of MLC, Insignia Financial, has agreed to a takeover from private equity investors seeking to profit from Australia’s $4.2 trillion superannuation system, ending a drawn-out battle to buy the wealth manager.
On Tuesday Insignia, formerly known as IOOF, backed a $3.3 billion takeover from private equity firm CC Capital, bringing to a close a previous bidding war for the firm.
Insignia Financial chief executive Scott Hartley.Credit: Louise Kennerley
ASX-listed Insignia agreed to the deal at $4.80 a share, which is a premium of more than 50 per cent to its share price before private equity giant Bain Capital made a bid for Insignia last year, igniting a series of rival bids.
Bain’s approach sparked a three-way contest for the business with CC Capital and Canadian giant Brookfield Capital earlier this year. Brookfield pulled out of the bidding war in March, while Bain dropped out in May, citing volatility on global markets.
CC Capital, a New York-based private equity firm, is buying Insignia with an alternative asset manager called OneIM. The deal will be CC Capital’s first investment in Australia, and it is subject to approvals from Insignia shareholders and authorities including the Foreign Investment Review Board and the prudential regulator.
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Insignia is the fifth-biggest player in the super sector, where it owns MLC and various other brands, and this is a key attraction for the buyer. Insignia’s predecessor, IOOF, was established in 1846 as the Independent Order of Oddfellows friendly society, and it ultimately listed on the ASX in 2003.
Insignia’s chief executive, Scott Hartley, said the business was well suited to being owned by CC Capital, which has a longer investment time frame than most private equity investors, giving it the ability to “look through” market cycles. He argued this long-term horizon of CC meant it could focus strongly on members’ interests.
“They understand that if you’re not delivering competitive returns to members or competitive outcomes to members, whether it be returns, service, product features and structures, online capabilities, you are not going to be sustainable long-term,” he said.
