Bain Capital is set to acquire an 18% stake in Manappuram Finance for $508m, a move that will see the US private equity giant jointly control the Indian gold loan provider alongside existing promoters, according to a report by Reuters.
The deal, which values Manappuram at a 9% premium over its last closing price, has sent the company’s stock to record highs, surging over 6% on Friday.
Manappuram’s long-time CEO and founder, VP Nandakumar, will transition to a non-executive chairman role following Bain’s investment, marking a significant leadership transition, with the PE firm expected to play a key role in appointing new leadership and influencing strategic decisions. Analysts from Jefferies and CLSA view Bain’s involvement as a positive catalyst for the company, raising their stock price targets by 14.6% and 20%, respectively.
With gold loans contributing 75% of Manappuram’s revenue, the investment comes at a time when record-high gold prices have boosted demand for gold-backed lending. The fresh capital is also expected to support Manappuram’s microfinance unit, Asirvad Micro Finance, which has faced regulatory scrutiny. In light of the deal, Asirvad has withdrawn its IPO plans, signaing a strategic shift in capital allocation.
