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Comparison website iSelect, which makes the bulk of its earnings by recommending health insurance policies, is in play. Tamara Voninski
The alarm bells are ringing at iSelect.
Predator Innovation Holdings Australia - which owns arch rival Compare the Market - is understood to have taken its iSelect stake to just south of 20 per cent, after picking up another big parcel of shares.
This time, sources said IHA was buying off Regal Funds Management in a trade handled by stockbroker Morgans at 80¢ a share. iSelect finished last week at 82¢.
While it is unclear yet what IHA's intentions are, iSelect is understandably on high alert. The company has defence advisers Goldman Sachs and Allier Capital on speed dial and the firms have no doubt started to think about what a combined iSelect/Compare the Market could look like.
iSelect's remaining shareholders are smart enough to work out that significant value could be unlocked by combining the pair.
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Last updated: Mon Jun 04 2018 - 00:49:17
iSelect's annual earnings have averaged about $20 million on an earnings before income and tax basis since the company listed in June 2013, and any tie-up with Compare the Market would likely generate synergies comparable to its earnings across marketing spend, call centre optionisation and head office.
Less is known about Compare the Market - although fundies do understand it is not short of funds. Compare the Market's parent company is backed by Canadian pension fund giant CPPIB, which took a 30 per cent stake for £675 million late last year in a deal valuing it at 17.9-times pre-tax profit.
Such a multiple would value iSelect well north of its $180 million market capitalisation - although it must be noted Compare the Market was not a company with a history of letting down shareholders and without a CEO, like iSelect.
