Baring Private Equity Partners India led by former Mphasis chairman Rahul Bhasin is planning to exit its eight-year investment in Kerala based gold loan company Manappuram Finance, sources with knowledge of the matter told Moneycontrol.
“Baring Private Equity Partners India is looking to sell its 8.78 percent stake in Manappuram Finance and has mandated investment bank JP Morgan to find a buyer,” according to one of the sources. “The sale of shares is likely to be carried out via the block deal route,” according to one of the sources.
At current market price, the 8.78 percent stake is valued at around Rs 1,243 crores.
Buoyed by a sharp uptick in gold prices, the Manappuram Finance stock has outperformed most of its NBFC peers during a challenging phase for the sector and surged by 51 percent in the last three months. The other listed gold financing company Muthoot Finance was up 13.6 percent during the same period.
“Specialised gold loan NBFCs have witnessed exceptional growth amongst organised players. Driving this growth is the aggressive expansion of branches, massive spending on marketing and rapid acquisition of customers” according to an August 2019 report by Firstcall Research.
According to the Manappuram Finance website, the firm has 4,351 (includes branches of subsidiary companies) branches across 28 states/UTs with assets under management (AUM) of Rs 19,400 crores and a workforce of 25,610.
Baring PE India is one of the oldest and largest PE fund advisors in the Indian subcontinent managing more than $1.1bn across 53 investments, according to its website. It holds stakes in Manappuram Finance through two entities, Baring India Private Equity Fund II and Baring India Private Equity Fund III (Fund 3). It had purchased a total of 12.57 percent stake in the company between 2011 and 2013. In March 2017, the private equity fund sold 3.77 percent stake in the company for around Rs 300 crores, according to exchange filings. The fund also exited Muthoot Finance in the same year, clocking returns of 2.4 times on its 2010 investment.
Quinag Acquisition (FDI ), a firm backed by funds advised by private equity firm Apax Partners also holds nearly 10 percent stake in Manappuram Finance, as per exchange filings.
In June 2019, the World Bank’s investment arm IFC announced that it was investing $35 mn in the NBFC player to help low-income households and small enterprises get access to loans against their gold assets.
In response to an email query from Moneycontrol, JP Morgan declined to comment. Moneycontrol is awaiting a response from Baring Private Equity Partners India and Manappuram Finance and will update this article as soon as we hear from them.
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