Private equity firm Bain Capital has agreed to acquire joint control of Manappuram Finance Ltd, a Kerala-based non-banking financial company and India's second-largest gold financier, in a deal worth more than $500 million.
The PE firm said in a statement Thursday it will invest Rs 4,385 crore ($508 million) to acquire an 18% stake in Manappuram via a preferential allotment of equity shares and warrants at a price of Rs 236 apiece. This is at a premium of about 30% over the six-month average trading price.
The transaction will trigger a mandatory open offer for the purchase of an additional 26% stake in the company on an expanded capital basis (excluding warrants). The open offer price has been fixed at Rs 236 per share. Based on the open offer subscription, Bain Capital’s stake will vary between 18% and 41.7% on a fully diluted basis.
Manappuram existing promoters will continue to stay fully invested in the lender. They will hold a 28.9% stake in the company post the investment on a fully diluted basis. Public shareholders will hold between 29.4% and 53.1% in the company depending on the open offer uptake.
The transaction is subject to customary closing conditions and regulatory approvals.
Bain said this investment aims to fuel the company’s next phase of growth and drive transformation by enhancing operational excellence, strengthening leadership, and expanding its presence across key segments.
The PE firm will have the right to “materially influence” the strategic decision making at Manappuram after the transaction. Following the transaction, Manappuram MD and CEO VP Nandakumar will step into a non-executive chairman and mentor role.
“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.
The private equity firm has invested in over 1,150 companies globally over the last 41 years, across various sectors. In India, the firm has invested in Axis Bank, L&T Finance, and 360 One Wealth & Asset Management, among others.
Manappuram Finance was established in 1949 in Valapad, Kerala. While the non-bank lender started as a pure-play gold finance company, it has evolved into a diversified financial services company, extending vehicle finance, home loans, microfinance, and lending to small and medium-sized enterprises.
The company caters to a customer base of over 6.59 million. The consolidated assets under management rose 9.5% year-on-year to Rs 44,218 crore as on December 31. Currently, gold loans comprise 55% of the overall portfolio.
