Bain Capital, a leading private equity firm, has officially announced its intention to acquire a significant stake in Manappuram Finance, the second-largest gold loan provider in India. This strategic move involves purchasing an 18% stake for a substantial ₹4,385 crore. The acquisition, set to occur through a preferential allotment of equity shares, is priced at ₹236 per share, showcasing a 30% premium over the six-month average.
Key Details of the Acquisition
- Stake Acquisition: Bain Capital will gain joint control of Manappuram Finance.
- Pricing Strategy: The share price represents a 9% premium over the closing price recorded on Thursday.
- Open Offer: Following this acquisition, Bain will extend an open offer to acquire an additional 26% stake at the same price of ₹236 per share.
In a formal announcement, Manappuram Finance specified that Bain Capital’s affiliates, namely BC Asia Investments XXV Limited and BC Asia Investments XIV Limited, will each acquire 93 million shares at the agreed price. Depending on the acceptance of the open offer, Bain Capital’s total ownership could range from 18% to 41.7% on a fully diluted basis, which considers potential shares from warrants.
Current Ownership and Market Potential
As of December 2024, the company’s founders, VP Nandakumar and Sushama Nandakumar, held a combined 34.72% stake. After the investment, the promoters are expected to retain a 28.9% stake, accounting for shares post-warrant conversion.
According to PwC, India’s gold loan sector is valued at over ₹7 lakh crore, yet it only penetrates less than 6% of the market, indicating tremendous growth opportunities. The consultancy suggests that the historically profitable nature of this sector presents a welcoming environment for new entrants.
Leadership Insights
VP Nandakumar, the Managing Director and CEO of Manappuram Finance, expressed pride in the company’s journey, highlighting its commitment to delivering value to stakeholders and investors. He remarked, "Leading this dynamic company has been a privilege, as we continue to set benchmarks in the NBFC sector."
In addition, Pavninder Singh, a partner at Bain Capital, praised Manappuram’s strong and diverse platform. He stated, "We are excited to provide the capital and operational expertise needed to foster growth and maintain industry leadership."
Company Overview
Founded in 1949, Manappuram Finance has expanded its reach significantly, boasting a customer base of over 6.59 million and operating through 5,357 branches with a dedicated workforce of 50,795 employees.
In other news, Manappuram’s micro-finance branch, Asirvad Micro Finance, has decided to withdraw its initial public offering draft due to prevailing market uncertainty.
This acquisition marks a pivotal moment for both Bain Capital and Manappuram Finance, positioning them strategically within a growing market ripe for exploration and expansion.
