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Manappuram Finance has shared crash 10 per cent after the Reserve Bank of India has flagged concerns over Bain Capital deal. The RBI is uncomfortable with
the same investor exercising control over more than one lending institution, whether it is a bank or an NBFC. In the past, private equity firms with stakes of 20 per cent or more in non-bank lenders have been forced to pare their holdings following RBI objections, news agency Reuters reported.
Bain Capital considers gradual exiting of Tyger Capital
Bain Capital, which announced plans to invest in Manappuram Finance in March last year, is now considering gradually exiting Tyger Capital, a smaller lender, to address the central bank’s concerns, according to people familiar with the development.These sources declined to be named as they are not authorised to speak to the media. Bain Capital did not comment. The firm has already secured approvals for the Manappuram deal from the market regulator and the competition watchdog, but RBI clearance is crucial for any large stake purchase in banks and NBFCs.
Manappuram Finance, a leading gold-loan lender, did not respond to queries. The RBI also did not comment, while Tyger Capital declined to offer a statement.
According to news agency Reuters, under the proposed transaction, Bain Capital plans to buy about 18 per cent in Manappuram Finance for roughly Rs 44000 crore and then launch an open offer for an additional 26 per cent. If completed, the deal would give Bain joint control of the company, including the ability to influence key management decisions.
The investment is planned through Bain’s BC Asia Investments XXV and BC Asia Investments XIV funds. Separately, Bain owns 93 per cent of Tyger Capital (earlier Adani Capital) after acquiring the stake from the Adani family in 2023, through its Special Situations fund.
Bain has argued that the stakes in Manappuram and Tyger are held via different funds and managed by separate teams, but sources say this reasoning may not be enough to convince the RBI.
Manappuram Finance has a loan book of about Rs 315 billion, largely led by gold loans. Tyger Capital’s book is smaller at Rs 73.2 billion and includes business, farm and home loans.
Foreign capital inflows into India’s financial sector have been strong over the past year. MUFG of Japan announced in December that it would acquire a 20 per stake in Shriram Finance for USD 4.4 billion, while Blackstone agreed in October to buy a 9.9 per cent stake in Federal Bank for about USD 700 million.
