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By Scott Murdoch and Shivangi Lahiri
SYDNEY (Reuters) -Insignia Financial shares shot to a three-year high on Monday after it revealed a A$2.87 billion ($1.78 billion) takeover bid from U.S.-based investment manager CC Capital Partners, eclipsing a A$2.67 billion offer from Bain Capital.
The deal would give CC Capital access to Australia's $A4.1 trillion superannuation system, which is considered one of the world's largest private pension markets.
The 178-year-old Australian money manager previously known as IOOF rejected private equity firm Bain Capital's approach in late December, saying the offer did not provide fair value to its shareholders.
Insignia shares gained 11% to A$3.93 per share in early trade, reaching their highest level since 2022, but remaining below the $A4.30 per share cash offer. Insignia said its board was considering CC Capital's proposal to assess if it was in the best interests of its shareholders.
Insignia Financial said CC Capital's non-binding bid offered a 7.5% premium to Bain Capital's offer and a 21.5% premium to Insignia's last closing price of A$3.54 on Friday.
CC Capital was formed almost a decade ago by Chinh Chu who was Blackstone's former co-head of private equity, according to the firm's website. If successful, the deal would be the New York-based firm's first major investment into Australia.
Insignia provides superannuation, financial advice and asset management services. It had A$319.6 billion of funds under management and administration at the end of September.
The transaction will give dealmakers hope that a rebound in corporate buyout activity Down Under in 2024 will be extended this year.
Australian M&A activity was worth $113.4 billion in 2024, according to LSEG data, up 15% on 2023. Inbound M&A from overseas buyers leapt 23% in the year compared to one year earlier, the data showed.
"Insignia's board may demand a higher premium given the company's significant role in Australia's superannuation industry but whomever the buyer is will not only need to please the board and shareholders but also regulators to get a deal over the line," said Stella Ong, market analyst at share trading platform Superhero.
"With Insignia's forward P/E still trailing behind that of AMP though, this may not be the last bid we see," she said, referring to rival Australian investment manager AMP.
CC Capital's offer requires Foreign Investment Review Board and prudential regulatory approval, Insignia said.
CC Capital did not immediately respond to a request for comment. Bain Capital declined to comment.
($1 = 1.6108 Australian dollars)
(Reporting by Scott Murdoch in Sydney and Shivangi Lahiri in Bengaluru, Additional reporting by Sneha Kumar; Editing by Chris Reese, Lisa Shumaker and Jamie Freed)
