Rising private equity appetite for Australasian financial services entities was underscored as 2025 began by a flurry of interest in the ASX-listed diversified firm, Insignia.
Formerly known as IOOF (and before that the International Order of Oddfellows), Insignia acknowledged a formal bid from New York-headquartered, CC Capital, early in January while officially denying rumours of another US private equity firm, Brookfield, entering the fray.
The CC play comes at a 7.5 per cent premium to the surprise A$4 per share indicative offer for Insignia from marquee US private equity operator, Bain Capital, mid-December.
Insignia knocked back Bain but the latest offer (and rumoured Brookfield dabble) has showcased a turnaround at the beaten-down financial services conglomerate, according to Morningstar.
In a note last week, Morningstar equity analyst, Shaun Ler, said: “The [CC] proposal vindicates our view that Insignia was undervalued, and that its earnings outlook looks brighter compared to its 2023-24 levels.”
“… Margin expansion prospects are improving, driven by restructuring initiatives such as migrating client funds to more efficient platforms, reducing nonessential costs, and an expected recovery in fund flows from cyclical lows.”
In its previous guise as IOOF, the company had a long history of acquisitions, most recently snapping up the ANZ Australia OnePath pensions and investment business and the National Australia Bank-owned MLC wealth management arm.
But IOOF also experienced a number of run-ins with Australian regulators, copping some flak – like many of its peers – during the sensational Royal Commission into financial services that filed a scathing report early in 2019.
The Australian financial services landscape was transformed in the wake of the Royal Commission with banks abandoning wealth management, Insignia picking up many of the pieces, while AMP has since sold off nearly all of its businesses (life insurance, asset management and financial advice).
Scott Hartley, who served as AMP Australia wealth management chief for two years until mid-2023, replaced Renato Mora as head of Insignia in March last year.
As well as its platform, superannuation and asset management assets, Insignia houses two iconic Australian financial advice brands – Bridges and Shadforths – that both operate under salaried adviser models.
Private equity firms clearly see some value in what amounts to the vertically integrated financial services business model previously plied by the likes of banks and AMP.
The action has spilled over to NZ, too, including in a deal finalised early last year, as Australian private equity manager, Pacific Equity Partners, took a 35 per cent stake in FirstCape – the entity containing BNZ investments, Harbour Asset Management and the Jarden NZ advisory network.
And in a late-breaking 2024 move, ubiquitous US private equity firm, TA Associates, bought half of Craigs Investment Partners.
However, TA has yet to offload its one-third share of Fisher Funds despite reported attempts to find a buyer more than a year ago. TA also owns pieces of Russell Investments, Betashares and the Apex Group.
Australian third-party fund marketing and financial advice business, Ironbark Asset Management, was reportedly also interested in Craigs.
Another Australia-based financial advisory practice roll-up, AZ New Generation Advisory (NGA), has also allegedly been sniffing around the NZ market.
“AZ NGA is always looking to partner with high quality accounting and financial advice businesses,” a spokesperson for the group said.
Last August, AZ NGA bought out the remaining minority stakes in advisory firms previously owned by AMP.
The business, headed by ex-pat New Zealander, Paul Barrett, itself took on a new private equity shareholder in December as Oaktree Capital (the firm co-founded by veteran investor, Howard Marks). Oaktree joined Italian listed diversified financial services company, Azimut, on the AZ NGA register.
Also last year in NZ, Investment Services Group (ISG) announced a review that could see the sale of all, or some, of its parts that include Devon Funds, Clarity Funds, Tahito, JMI Wealth and Select Wealth Management.
It is understood discussions are ongoing.