Manappuram Finance Limited, one of Kerala’s leading gold loan providers, is all set for a takeover by American private investment firm, Bain Capital. The deal is in its final stages, and if it goes through, Bain might end up owning as much as 46% of Manappuram’s shares. The deal size is estimated to be around $1 billion.
Currently, Manppuram’s CEO and Managing Director V.P. Nandakumar and his promoter group hold a 32.25% stake in the company. Bain Capital plans to acquire nearly a quarter of the company through a combination of fresh capital infusion via preferential allotment and stake sale from the promoters. Following this, the investment firm also plans to launch an open offer for an additional 26% stake, which could bring its total shareholding to 46%.
READ: Will Elon Musk own TikTok soon? (January 14, 2025)
According to reports, the preferential allotment is expected to be priced at a 12.5-15% premium, while the secondary sale from promoters could be at a premium of 22.5-25% over Friday’s closing price of Rs. 200.85 or about $2.30. This would result in an estimated blended price of Rs. 237 to 240 or $2.75 per share.
In November 2024, Manappuram Finance was originally in conversation with multiple parties for a stake sale. While Bain Capital was the frontrunner, there were delays in the negotiations due to disagreements.
Bain Capital was primarily interested in the gold loan business, which contributes 55% of the company’s total assets under management (AUM). The promoters were unwilling to sell only the gold loan segment, as it would leave them with less profitable businesses such as microfinance, vehicle finance, and housing loans. The Reserve Bank of India (RBI) also barred Ashirvad Micro Finance, Manappuram’s microfinance division, from sanctioning and disbursing loans in October 2024. This caused regulatory hurdles, however this ban was lifted in January this year.
While Bain is seeking executive control, Nandakumar and his family members might transition into non-executive roles. Nandakumar inherited the business in 1986 following his father’s passing and transformed the single-office pawnbroking and money lending operation in Valapad, Thrissur, into one of the largest Non-Banking Financial Companies, or NBFCs in India.
Under his leadership, Manappuram Finance Limited has achieved exceptional growth, boasting a consolidated AUM of Rs 44,200 crore or an estimated $5.3 billion, with over 5,000 branches across India, employing more than 50,000 people. In FY24, the company reported a total income of Rs. 8,920 crore or a little over $1 billion and a net profit of Rs. 2,197 crore or $264 million approximately, making it the third most profitable listed company from Kerala.
READ: Musk’s Starlink Wi-Fi can now be found on United Airlines flights (January 6, 2025)
Manappuram recently confirmed that no material information requiring disclosure under SEBI’s listing regulations is available at the moment. “We have taken note of the captioned news item, and confirm that currently there is no information which requires disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). As a general matter, the company, as part of its business strategy, explores various strategic / growth opportunities in the best interest of its stakeholders, from time to time,” the company stated. It also confirmed that the current movement in the company’s stock price has not been influenced by any undisclosed events.