Manappuram Finance surges over 7.5%, hits record high as Bain Capital to acquire 18% stake; check details

The stock's previous 52-week high level on the NSE was ₹230.40, which was touched on July 19, 2024.

The deal will make it one of the promoters of the company and provide joint control.

As part of the transaction, Bain Capital will be investing ₹4,385 crore to acquire an 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 about 30% over the six-month average trading price, a joint statement said.

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, it added.

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), it noted.

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 (including shares to be issued according to the exercise of warrants).

Existing promoters will hold a 28.9% stake in the company post the investment on a fully diluted basis, including shares to be issued according to the exercise of warrants, the joint statement said.

The transaction is subject to customary closing conditions and regulatory approvals.

Founded in 1949, Manappuram Finance is a leading non-banking financial institution and the second-largest financier in the gold loan segment in India.

About Bain Capital

Founded in 1984, Bain Capital is one of the world’s leading private investment firms. It is an American private investment firm based in Boston, Massachusetts.

The firm's global platform invests across five focus areas: private equity, growth & venture, capital solutions, credit & capital markets, and real assets. In these focus areas, the company brings deep sector expertise and wide-ranging capabilities. Bain Capital has 25 offices on four continents and approximately $185 billion in assets under management.

Manappuram Finance Q3 FY25 Results

Manappuram Finance, according to news reports, posted a third-quarter (Q3 FY25) profit that missed analysts' estimates, hurt by the stress in its microfinance business, including a quarter-long ban from issuing loans.

The company's consolidated net profit halved to ₹282 crore ($32.5 million) in the quarter, missing analysts' average estimate of ₹459 crore, as per data compiled by LSEG, Reuters reported.

Indian lenders have seen rising default rates in microfinance loans, or collateral-free small loans to borrowers, following a period of aggressive lending in the segment.

Bad loans and provisions in Manappuram's microfinance unit surged four-fold to ₹473 crore, accounting for a large chunk of total company-wide provisions of ₹555 crore in the October to December quarter.

However, revenue from Manappuram's gold loan portfolio, which contributes 75% of total revenue, rose 17%, aided by gold prices jumping to record highs.

Rising gold prices increase how much a customer can borrow against bullion, benefiting gold financiers in terms of loans issued.