According to a report in Economic Times (ET), talks between US-based private equity firm Bain Capital and gold loan company Manappuram Finance to buy stake have now reached the final stage. This information has been given quoting sources. Currently, Manappuram Finance promoter V P Nandakumar and his family hold 35.25 per cent stake in the company, which is valued at around Rs 5,992 crore based on the current market capitalization (market cap) of Rs 17,000 crore.
How much will the company’s shares be priced?
Under this deal, Bain Capital will invest through preferential allotment to infuse fresh capital in Manappuram Finance, while the promoters will sell their stake through an offer for sale (OFS). According to the report, the primary allotment is likely to be at a premium of around 12.5-15 per cent to the current market price, while the shares will be sold at a price 22.5-25 per cent higher than Friday’s closing price. The share price is expected to be Rs 237-240 per share. The total value of this deal is estimated to be between Rs 9,000-10,000 crore.
Bain Capital will get a large stake in the company
The report said that under this deal, Bain Capital can acquire about one-fourth stake in the company. After this, Bain Capital will also launch an open offer to increase its stake in the company, which will increase the stake to 26 percent. This open offer will come at a price equal to the secondary share sale. If this open offer is fully subscribed, then Bain Capital can buy up to 46 percent stake in total with the increased equity capital. For this purchase, Bain Capital will have to spend around Rs 9,000-10,000 crore.
Impact on company shares
Due to the news of this possible deal, Manappuram Finance shares have seen a rise of 36.67 percent in the last three months. yonojguestblog However, in October last year, when the Reserve Bank of India (RBI) barred Manappuram Finance subsidiary Ashirvad Microfinance from lending, the company’s shares fell 37.5 per cent from their 52-week high.
Bain Capital’s strategy
Bain Capital is focusing on increasing investment in India’s financial services sector. Through this deal, Bain Capital can strengthen its hold in India’s growing gold loan market. Manappuram Finance is one of India’s leading gold loan companies and has a strong hold in rural and semi-urban areas. This investment will give Bain Capital an opportunity to further expand its presence in the financial services sector.
More Read
Impact on Manappuram Finance’s future
The purchase of this stake by Bain Capital will provide new capital to Manappuram Finance, which will enable the company to further expand its business activities. Apart from this, it will also strengthen the balance sheet of the company and increase investor confidence.
This deal between Manappuram Finance and Bain Capital can be a significant development in the Indian financial services sector. If this deal is completed successfully, it will not only benefit Manappuram Finance but will also give Bain Capital a dominant position in the Indian gold loan market. Now all eyes are on the official announcement of this deal.
Dear CEO,
We are an investment and funding firm, working in alliance with a high-net-worth group to provide financing at minimal interest rates. We believe that a strategic partnership between our organizations could create substantial value for both parties.
We would be delighted to share more details about this opportunity upon your response. Please feel free to reach out if you require any additional information or would like to discuss this further.
Looking forward to your thoughts.
Best regards,
Art Allen