Bain Capital is in the final stages of negotiations with the promoters of Kerala-based Mannapuram Finance to buy a controlling stake in the gold loan provider, according to a report by The Economic Times.
The deal will be a combination of fresh capital infusion by Bain and a secondary share sale by the promoters that will increase the private equity investor’s shareholding in the company to 46%.
The promoter group, led by managing director and chief executive Nandakumar VP, holds a 35.35% stake in Mannapuram Finance that has a market capitalisation of Rs 17,000 crore.
The deal talks come a month after the Reserve Bank of India lifted lending restrictions on Mannapuram’s subsidiary Ashirvad Micro Finance Ltd.
Mannapuram had been struggling with its microfinance business after the RBI banned it from issuing loans, citing dubious pricing policies and high markups. The company’s net profit halved to Rs 282 crore in the December-ended quarter, missing analyst estimates. Bad loans in its microfinance arm also surged four-fold to Rs 473 crore.
Established in 1949, the non-banking financial company has more than 4,100 branches across the the country, with around Rs 157.65 billion worth of assets under management and 20,185 employees.
Having started as a gold loan provider, it has diversified into new business areas like microfinance, vehicle and housing finance, and SME lending through its subsidiaries Manappuram Home Finance Ltd, Manappuram Insurance Brokers Ltd, and Asirvad Microfinance Limited.
Mannapuram Finance’s share price jumped 2.45% to Rs 206.25 on NSE on Monday following the ET report.
