Bain Capital-Manappuram Finance Deal Expected to Be Announced Soon

Bain Capital to Acquire Majority Stake in Manappuram Finance

After months of negotiations, a major deal between Bain Capital and Manappuram Finance is on the verge of being finalized. Bain Capital is set to acquire a controlling stake in India’s second-largest gold financing company, purchasing shares from its founder and Managing Director & CEO, VP Nandakumar.

• Bain Capital will acquire approximately 22% stake from Nandakumar and his family in the first tranche.
• An open offer will follow to increase Bain’s stake to 42%, as per SEBI regulations.
• The deal is valued at a 20% premium to the 26-week average price.
• Promoters will retain a 10% stake and may hold two non-executive board positions.
• Regulatory approvals could take 4-6 months, after which the open offer process will begin.

The official announcement is expected by the end of this week, according to sources familiar with the matter.

Exclusive Negotiations Between Bain Capital and Manappuram Finance

Bain Capital had entered into exclusive negotiations with Nandakumar and Manappuram Finance in November 2024. The Economic Times had first reported the development after the signing of an exclusive non-binding term sheet for the deal.

• Talks were initially delayed due to regulatory uncertainties regarding Manappuram’s microfinance subsidiary, Asirvad Micro Finance Limited.
• In January 2025, Asirvad Micro Finance exited an embargo imposed by the Reserve Bank of India (RBI), allowing the deal to progress.
• The final agreement will include all key business segments of Manappuram Finance, including affordable housing, vehicle finance, and loans against property.

Regulatory Challenges and Deal Structure

The deal took time to materialize due to concerns over which business segments would be included and the extent of promoter stake dilution.

• Bain Capital was clear that it wanted a controlling stake to make the acquisition worthwhile.
• The exclusivity period ended in mid-February, but talks resumed with positive momentum in recent weeks.
• Promoters were initially reluctant to cede control, leading to prolonged discussions.

A source close to the negotiations mentioned that evolving regulatory conditions and restrictions on microfinance businesses may have influenced Nandakumar’s decision to exit.

Open Offer and Next Steps

Once the initial 22% stake acquisition is completed, Bain Capital will launch an open offer to acquire an additional 20% stake, as per SEBI takeover guidelines.

• The pricing of the open offer will be determined by SEBI regulations.
• The final acquisition process is expected to take 4-6 months, subject to regulatory approvals.
• Promoters will step back from operational roles once the transaction is approved.

Emails sent to Manappuram Finance and Bain Capital seeking confirmation remained unanswered at the time of publishing. Nandakumar also did not respond to queries regarding the deal.

Potential Industry Impact and Future Outlook

This deal marks one of the largest private equity transactions in India’s financial services sector.

• Manappuram Finance is a key player in the gold loan segment, a market that has seen strong growth in recent years.
• Bain Capital’s entry signals confidence in India’s financial sector, particularly in NBFCs (Non-Banking Financial Companies).
• Regulatory changes and RBI’s tightening grip on microfinance institutions may have influenced the timing of this deal.

Industry experts believe that Bain Capital’s management approach and global expertise could bring a new growth trajectory for Manappuram Finance, especially in diversifying its lending portfolio.