India's Manappuram Finance announced that Bain Capital will invest 43.85 billion rupees ($508 million) to acquire an 18% stake in the gold loan provider, driven by record prices of gold that have made mortgaging appealing.
Bain Capital will subscribe to Manappuram's shares and warrants at 236 rupees each, reflecting a 30% premium over the company's six-month average trading price. Following this investment, Bain Capital will be classified as a promoter of the company, sharing control with existing promoters.
In India, the world's second-largest gold consumer, households traditionally purchase gold during festivals and weddings. High gold prices are making gold loans increasingly attractive. The Indian gold loan market is projected to reach approximately 14.19 trillion rupees by fiscal 2029, with a five-year compound annual growth rate of 14.85%, according to PwC.
The transaction is expected to close in the second or third quarter of the next financial year and will initiate a mandatory open offer to purchase an additional 26% stake from existing shareholders at the same price. Depending on the open-offer subscription, Bain Capital's stake post-investment may rise between 18% and 41.7%. Manappuram's promoters, including managing director and CEO V P Nandakumar, will retain a 28.9% stake in the company.
Post-deal, Bain Capital will also gain the right to influence key strategic decisions, including the nomination of key appointments such as the CEO.
In a separate announcement, Manappuram's microfinance arm, Asirvad Micro Finance, stated it would withdraw its initial public offering draft papers due to uncertain market conditions.