By Rishav Chatterjee

(Reuters) – Australia’s Insignia Financial rejected Bain Capital’s A$2.67 billion ($1.69 billion) bid, saying the offer did not provide fair value to its shareholders, creating a setback for the plans in the Asian expansion of the giant buyout.

Bain earlier in the month offered a $4 each for the 178-year-old money manager, reigniting a strong sense of investor appetite for Australian-listed wealth managers who have seen their asset bases that are growing rapidly.

Insignia rejected the Boston-based investment firm’s offer on Wednesday, saying it “does not adequately represent fair value for shareholders.”

“The ball is now in Bain’s court to raise the bid and give a reason to say yes or they could walk away,” said Henry Jennings, senior market analyst at the marcustoday newsletter.

“I would say that somewhere above A$4.20 per share is enough to get them talking.”

Bain has also been active in Japan, making better offers for Fuji Soft amid a bidding war with KKR.

Bain completed the final closing 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 A$2.2 billion deal with Australia’s Perpetual also hangs in the balance after the tax blowout.

Australia’s wealth management sector has recently seen some merger and acquisition activity. Regal Partners made an offer for Platinum Asset Management in September, but buyout talks fell through.

Insignia rejected Bain’s bid as it pursues a strategy to restore shareholder confidence, already facing opposition from activist investor Tanarra Capital.

“We consider Bain’s proposal to be extremely opportunistic. We want the Insignia management team to remain focused on the business improvement plan that they are in the early stages of delivering,” said Tanarra on Tuesday.

Insignia shares traded 1.7% lower at A$3.54.

($1 = 1.5785 Australian dollars)