Bain Capital, a US-based private equity firm, is poised to acquire a controlling stake in Manappuram Finance Ltd., a leading gold loan company in India. The deal involves Bain purchasing an 18% stake for Rs 4,385 crore through a preferential allotment of shares, which includes 9.29 crore shares priced at Rs 236 each and an equal number of warrants.

In addition to this stake, Bain Capital plans to make an open offer for an additional 26% of the company's public shares at the same price. This transaction marks the largest investment in a gold loan firm to date, positioning Manappuram Finance alongside Muthoot Finance as one of the top players in the sector.

Manappuram Finance stated that this strategic investment is intended to support the company's growth and transformation by improving operational efficiency, enhancing leadership, and expanding its market presence. Following the investment, Bain Capital's stake could range from 18% to 41.7% on a fully diluted basis, which includes the convertible warrants. The deal is contingent upon regulatory approvals and other closing conditions.

Currently, the promoter family holds a 35.25% stake in Manappuram, while foreign portfolio investors own 25.27% and resident individuals hold 18.2%. After the investment, the promoters will retain a 28.9% stake on a fully diluted basis. VP Nandakumar, the current managing director and promoter, will transition to the role of executive chairman and mentor.

Under the agreement, Bain Capital and the existing promoters will have the right to nominate board members. If both parties maintain a 10% stake, they can each appoint two directors; if their stakes fall between 5% and 10%, they can appoint one director each. These nomination rights will cease if their holdings drop below 5%.

Bain Capital will also have the authority to appoint a CEO and other key managerial personnel within Manappuram Finance and its subsidiaries, granting them significant influence over strategic decision-making.

Founded in 1949 in Thrissur, Kerala, Manappuram Finance began as a local money lender. VC Padmanabhan established the company, and his son Nandakumar took over in 1986, becoming the current promoter.

In its latest financial report for the third quarter, Manappuram Finance reported a net profit of Rs 278.5 crore, reflecting a 51.6% decline year-on-year. As of December 31, the company had consolidated assets under management totaling Rs 44,200 crore, which included a gold loan portfolio of Rs 24,500 crore. Additionally, vehicle and equipment finance loans accounted for Rs 5,085 crore, while the micro, small, and medium enterprises segment contributed Rs 3,000 crore.

The company's wholly-owned subsidiary, Asirvad Microfinance, reported outstanding microfinance loans of Rs 9,133 crore, and its housing finance subsidiary had a book value of Rs 1,778 crore at the end of the third quarter.