Manappuram Finance Shares Surge 6% as Bain Capital Invests $508 Million
Shares of Manappuram Finance surged 6.3% to a record high of ₹231.08 on Friday after U.S. private equity firm Bain Capital announced plans to acquire an 18% stake in the gold loan provider for $508 million. The investment, priced at ₹236 per share, represents a 9% premium over Thursday’s closing price. Analysts believe this move will help streamline management succession, as founder and CEO V.P. Nandakumar transitions to a non-executive chairman role post-investment.
Bain Capital’s stake will give it joint control of Manappuram alongside existing promoters, with the authority to influence strategic decisions, including key leadership appointments. Analysts at Jefferies and CLSA view this as a positive step, leading them to raise their price targets on the stock by 14.6% and 20%, respectively. They anticipate a healthy re-rating of Manappuram’s stock as new leadership takes over. The deal comes at a time when rising gold prices have fueled demand for gold-backed loans, which contribute 75% of the company’s revenue.
The investment, expected to close in the next financial year, will bolster Manappuram’s gold loan business and provide capital to offset losses in its struggling microfinance unit, Asirvad Micro Finance. In light of the deal, Asirvad will withdraw its IPO draft papers, signaling a shift in strategic priorities.
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