The Indian financial market witnessed a notable surge in the stock of Manappuram Finance as it climbed 4% to reach Rs 209 on BSE during early trading on Monday. This rise was fueled by advanced negotiations between the company and the prominent American private equity firm, Bain Capital. According to sources, these discussions have reached their concluding phase, with Bain Capital poised to acquire a substantial stake from the promoters of India’s second-largest gold loan provider.

The current ownership structure sees the promoter group, led by Managing Director and CEO Nandakumar VP, holding 35.25% of Manappuram Finance. The company boasts a market capitalization of approximately Rs 17,000 crore. The proposed deal includes Bain Capital injecting fresh capital through a preferential allotment and purchasing shares from existing promoters. The preferential allotment is anticipated to be priced at a premium of around 12.5-15%, while the secondary share sale will command a higher premium of 22.5-25%. The combined price is expected to hover around Rs 237-240 per share.

Bain's acquisition strategy could lead to a voluntary open offer for an additional 26% stake due to a change in control. If fully subscribed, this could result in Bain owning up to 46% of the expanded equity base, potentially paying up to Rs 9,000-10,000 crore. Bain aims to gain management control through affirmative rights and plans to introduce a new CEO, with Nandakumar and his family transitioning to non-executive roles. Over the past three months, Manappuram's shares have risen 36.67%, driven by expectations of this transaction. Despite regulatory challenges last year, which caused a significant drop in share prices, the company has shown resilience and continues to explore strategic partnerships.

This partnership with Bain Capital signals a positive outlook for Manappuram Finance. It underscores the company's commitment to growth and innovation, setting a strong foundation for future success. By embracing external investments and leadership changes, Manappuram Finance demonstrates its adaptability and dedication to enhancing shareholder value. Such strategic moves not only stabilize the company but also foster an environment conducive to long-term prosperity and sustainable development.