(Reuters) -India’s Manappuram Finance said on Thursday Bain Capital would invest 43.85 billion rupees ($508 million) to acquire an 18% stake in the gold loan provider at a time record prices of the precious metal has made its mortgaging appealing.
The asset manager will subscribe to Manappuram’s shares and warrants at 236 rupees apiece, implying a 30% premium over its six-month average trading price.
Bain Capital will be classified as a promoter of the company post-investment and will jointly control it with existing promoters.
Households in India, the world’s second-biggest gold consumer, typically buy bullion during festivals and weddings. Record prices make gold loans more attractive.
Indian gold loan market is expected to reach around 14.19 trillion rupees by fiscal 2029 at a five-year compound annual growth rate of 14.85%, according to PwC.
The deal, expected to close by the second or third quarter of the next financial year, will trigger a mandatory open offer for the purchase of an additional 26% stake from existing shareholders at the same price, India’s second-largest gold loan provider said.
Based on open-offer subscription, Bain Capital’s stake post-investment will vary between 18% and 41.7%. Manappuram’s promoters, which include its managing director and chief executive V P Nandakumar, will hold a 28.9% stake in the company.
After the deal, Bain Capital will also have the right to influence strategic decisions at the company, including the right to nominate for appointment of key posts such as the CEO.
Separately, Manappuram’s microfinance arm Asirvad Micro Finance said it would withdraw its initial public offering draft papers due to uncertain market conditions.
($1 = 86.3290 Indian rupees)