Crescent Capital’s $220 million bid for life insurance and funds manager ClearView Wealth will have to be increased to succeed, according to a prominent stockmarket analyst.

Investorfirst analyst Stewart Oldfield says the Crescent bid is unlikely to succeed in its current form and “they will have to sweeten it”.

“These deals typically don’t go through for less than embedded value and the Crescent bid is around 14% under ClearView’s embedded value,” he told insuranceNEWS.com.au.

ClearView is 47.8% owned by GPG, and Mr Oldfield says there is “no reason why GPG would be likely to accept at these levels”.

“Deals like this in Australia are typically priced at 1.4 times embedded value. Dai-Ichi Life’s purchase of Tower is an example.”

Dai-Ichi bought Tower in April 2011 for $1.2 billion, or $4 a share, which was 46% above Tower’s average share price for the previous 12 months. The Crescent bid for ClearView is 9% above its six-month trading average.

Crescent was formed in 2000 as a private equity investor and has about $1 billion invested in a range of companies including travel insurer Cover-More, as well as exposure to the health science and industrial sectors.

ClearView, formed in 2010 with the purchase of MBF Life and ClearView Retirement by investment group MMC Contrarian, has $3 billion in funds under management and $41 million in annual risk premium income.

Industry sources believe the ClearView situation will take some time to resolve as major players intimately know each others’ positions. Gary Weiss, the former lieutenant to GPG’s founder Ron Brierley, has a small stake in ClearView through his Ariadne group and will be ClearView chairman if the deal goes ahead.

Mr Weiss left GPG in April last year after a dispute with shareholders about the direction of the company. ClearView is trading at around 54 cents, well above the Crescent bid price of 50 cents a share.