Shares of non-bank lender Manappuram Finance rose as much as 14% in intraday trade on Friday to hit a record high after private equity firm Bain Capital said it will be invest ₹4,385 crore to acquire an 18% stake in the Kerala-based non-banking financial company (NBFC).
Bain Capital has entered into definitive agreements to acquire joint control in Manappuram Finance, the second-largest gold financier in India.
As part of the transaction, Bain Capital will be investing ₹4,385 crore to acquire 18% stake on a fully diluted basis via preferential allotment of equity and warrants at a price of ₹236 per share which is at a premium of around 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 ₹236 per share. Based on the open offer subscription, Bain Capital’s stake post the investment will vary between 18% and 41.7% on a fully diluted basis.
Reacting to the development, shares of Manappuram Finance rose 13.8% to hit a record high of ₹247.55 on the BSE, taking the company’s market capitalisation to over ₹20,000 crore.
The stake purchase will be through Bain’s affiliates i.e., BC Asia Investments XXV Limited and BC Asia Investments XIV Limited (Bain Capital) in partnership with the existing promoters who will continue to stay fully invested. Existing Promoters will hold a 28.9% stake in the company post the investment on a fully diluted basis (including shares to be issued pursuant to exercise of warrants).
This strategic 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 company said.
Founded in 1949, Manappuram Finance has grown to serve over 6.59 million customers through an extensive network of 5,357 branches and a workforce of 50,795 employees. The company has successfully expanded beyond gold loans into microfinance, vehicle finance, housing finance and SME lending, establishing itself as a diversified financial services provider.
“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,” said V.P. Nandakumar, MD & CEO at Manappuram Finance.
“This collaboration leverages our deep expertise and commitment to sustainably expanding India’s financial services sector, while democratising access to financial products that foster entrepreneurship and wealth creation across the country,” said Pavninder Singh, Partner at Bain Capital. “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.”
There continues to be a huge opportunity for the company to accelerate growth in the core segments, said Rishi Mandawat, Partner at Bain Capital. “We are partnering with the family to provide capital for growth and help the company on a professionalisation journey that will enable it to drive better operational efficiency and risk management,” he added.
Bain Capital has deep experience in investing to support the growth and leadership of a diversified set of financial services businesses in India and globally, including Axis Bank, 360One Wealth & Asset Management, L&T Finance Holdings, and Lionbridge Capital, among others.
