((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Updated with analyst commentary in paragraphs 4-5, Tanarra commentary in paragraph 11 and actions in paragraph 12) by Rishav Chatterjee
Australian firm Insignia Financial IFL.AX has rejected Bain Capital’s A$2.67 billion ($1.69 billion) takeover offer, saying the offer did not provide fair value to its shareholders, creating an obstacle to the buyout giant’s Asian expansion plans.
Earlier this month, Bain offered A$4 for the 178-year-old wealth management company, reigniting investor appetite for Australian-listed wealth management companies which have seen strong asset growth.
Insignia declined the Boston-based investment firm’s offer on Wednesday, saying it “did not adequately represent fair value to shareholders.”
“The ball is now in Bain’s court, who can either raise his offer and give a reason to say yes, or back out,” said Henry Jennings, senior market analyst at the Marcustoday newsletter.
“I would say a price above A$4.20 per share would be enough to get them talking
Bain has also been active in Japan, making upgraded offers for Fuji Soft 9749.T amid a bidding war with KKR KKR.N .
Bain completed the final close of its fifth pan-Asian private equity fund for $7.1 billion in November last year. It also struck a deal to acquire Australian aged care operator Estia for A$838 million in August.
KKR’s deal with Australia’s Perpetual PPT.AX , worth A$2.2 billion, is also on hold after a blowout tax bill.
The Australian wealth management industry has recently been subject to mergers and acquisitions. Regal Partners
RPL.AX made an offer for Platinum Asset Management in September, but negotiations broke down.
Insignia rejected Bain’s offer as part of its strategy to restore shareholder confidence, having already faced resistance from activist investor Tanarra Capital.
“We view Bain’s proposal as very opportunistic. We want Insignia’s management team to remain focused on the business improvement plan they are implementing,” Tanarra said Tuesday .
Insignia shares were trading at A$3.54, down 1.7 per cent.
(1 dollar = 1.5785 Australian dollars)
