Bain Capital to buy 18% stake in Manappuram Finance for ₹4,385 crore via preferential issue, deal triggers open offer

Mumbai: US-based private investment firm Bain Capital will invest ₹4,385 crore to acquire an 18% stake and take joint control of Kerala-based non-bank lender and the country’s second-largest gold financier Manappuram Finance Ltd.

Existing promoters of the 75-year-old non-banking financial company will continue to stay fully invested, the investment firm said in a statement. The “strategic investment” is aimed at fuelling the next phase of growth for the company and driving transformation by “enhancing operational excellence, strengthening leadership, and expanding its presence across key segments”.

As part of the transaction, the 18% stake will be acquired through affiliate companies—BC Asia Investments XXV Ltd and BC Asia Investments XIV Ltd (Bain Capital)—on a fully diluted basis via preferential allotment of equity shares and warrants of Manappuram Finance at ₹236 per share, a 30% premium over the six-month average trading price. On Thursday, shares of Manappuram Finance ended 1.7% higher at ₹217.49 on the National Stock Exchange.

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The transaction will trigger a mandatory open offer to purchase an additional 26% stake in the company on an expanded capital basis (excluding warrants).

Rishi Mandawat, partner at Bain Capital, said there is a “huge opportunity” for the company to accelerate growth in core segments. “We are partnering with the family to provide capital for growth and help the company on a professionalization journey that will enable it to drive better operational efficiency and risk management.”

Founded in 1949, Manappuram Finance has served over 6.59 million customers through a network of 5,357 branches and 50,795 employees. Since its inception, the NBFC has expanded beyond gold loans into microfinance, vehicle finance, housing finance and small business lending.

Consolidated assets under management (AUM) of the NBFC stood at ₹44,217 crore as of December, with the non-gold loan business accounting for 44.6%. Standalone capital adequacy ratio of the lender was at 30%.

“As we embark on the next phase of our growth, we are delighted to welcome Bain Capital as our new partner. Their leadership team is renowned for its commitment to excellence, and their sharp focus on growth will unlock fresh opportunities for Manappuram Finance,” V.P. Nandakumar, managing director and chief executive, Manappuram Finance, was quoted as saying in the release.

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The open offer price has also been fixed at ₹236 per share. Based on the open offer subscription, Bain Capital’s stake post-investment will vary between 18% and 41.7% on a fully diluted basis (including shares to be issued pursuant to the exercise of warrants). The existing promoters will hold 28.9% of the company, the release said.

The transaction is subject to closing conditions and regulatory approvals. Bain Capital was advised by Kotak Investment Banking, Boston Consulting Group India, Cyril Amarchand Mangaldas, Ernst & Young LLP, Kirkland & Ellis LLP and Unaprime Investment Advisors, while Manappuram Finance, its affiliates and existing promoters were advised by Spark Capital and Khaitan & Co.

“Manappuram has developed a robust, diversified platform, and we look forward to providing the necessary capital, strategic resources, and operational expertise to help the company accelerate its growth and continue to lead in the industry,” said Pavninder Singh, partner at Bain Capital, adding that the collaboration will leverage Bain Capital’s expertise and commitment to sustainably expanding India’s financial services sector.

Bain Capital’s other investments in India’s financial services sector include Axis Bank Ltd, 360One Wealth & Asset Management, L&T Finance Holdings Ltd, Lionbridge Capital and esure, among others.

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