Manappuram shares fall 7% as report says Bain deal delayed by regulatory concerns

Manappuram shares fall 5% as report says Bain deal delayed by regulatory concerns

• Manappuram Finance drops 5% as RBI questions Bain's stake proposal
• Bain may divest Tyger Capital stake to address RBI's objections
• RBI opposes investors controlling multiple lenders, including non-bank firms

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Shares of Manappuram Finance Ltd fell 7% on January 9 after a Reuters report said Reserve Bank of India has raised objections to Bain Capital's plan to acquire a controlling stake in the NBFC.

At 2:40 pm on January 9, Manappuram Finance shares were trading 7% lower at Rs 287.3 apiece.

Bain, which announced its planned investment in the gold loan firm last March, is exploring a phased divestment in Tyger Capital, a smaller firm, to address the RBI's concerns, a source told Reuters.

RBI frowns on investors having control of multiple lenders - whether they be banks or non-banks. Private equity firms that have held 20% or more in non-bank lenders have previously had to divest holdings in the face of RBI opposition, reported Reuters.

Bain received approval for the Manappuram deal, which was announced last March, from market regulator SEBI and the competition commission but the RBI is the final authority for the clearance of any large stake purchases in banks and non-bank lenders.

The proposed deal calls for Bain to acquire 18% of Manappuram for around Rs 4,400 crore after which it would launch an open offer for an additional 26%. That would make Bain one of two controlling shareholders with the right to influence management decisions.

The investments would be made through two of its funds, BC Asia Investments XXV and BC Asia Investments XIV.

Bain owns 93% of non-bank lender Tyger Capital, formerly Adani Capital, after purchasing shares from the Adani family in 2023. That investment is held by the Bain Capital Special Situations fund.

Bain has argued that the investments are being made through different funds and teams but that argument is unlikely to sway the RBI, according to one of the sources.

Manappuram has a Rs 31,500-crore loan book, focused on fast-growing gold loans. Tyger has a smaller asset base of Rs 7,320 crore that includes business, farm and home loans.

India's financial sector saw a rush of foreign investments last year. Japan's MUFG

announced in December it would take a 20% stake in Shriram Finance for $4.4 billion. Blackstone agreed in October it would pay around $700 million for a 9.9% stake in Federal Bank.