Shares of Manappuram Finance plunge 10% after reports of RBI objections to Bain Capital deal

Shares of Manappuram Finance fell 10% intraday to hit the day’s low of aRs 278.55 on the NSE, following a Reuters report saying India’s banking regulator has raised objections to Bain Capital’s plan to acquire a majority stake in the company.The Reserve Bank of India has expressed reservations, saying the U.S. company has a controlling stake in another Indian lender, the report said, citing three people with direct knowledge of the matter.

Meanwhile, the exchanges have sought clarification from Manappuram Finance regarding the news report and at the time of filing the story, the gold loan company’s response was awaited.The sell-off took place amid high volumes with over 2.5 crore shares changing hands on the NSE around 3.14 pm. The total traded value of the shares was Rs 740 crore.

Bain, which announced its planned investment in the gold loan company last March, is exploring a phased disinvestment in Tyger Capital, a smaller company, to address the RBI’s concerns, the report said, citing one of the sources.

Bain declined to comment, the Reuters report said.

The sources were not authorized to speak to the media and declined to be identified. ETMarkets cannot independently verify the veracity of the story.

Manappuram, which provides loans using gold as collateral, did not respond to a request for comment.

The RBI also did not respond to a request for comment, while Tyger declined to comment.

The proposed deal calls for Bain to acquire 18% of Manappuram for about US$44 billion ($488 million), after which it would launch an open offer for a further 26%. That would make Bain one of two controlling shareholders with the right to influence management decisions.

The investments would be made through two of its funds, BC Asia Investments XXV and BC Asia Investments XIV.

Bain owns 93% of non-bank lender Tyger Capital, formerly Adani Capital, after buying shares from the Adani family in 2023. That investment is in the hands of the Bain Capital Special Situations fund.

Bain has argued that the investments are being made through different funds and teams, but one of the sources said this argument is unlikely to sway the RBI.

Manappuram has a loan book of Rs 315 billion, focused on high-growth gold loans. Tyger has a smaller asset base of Rs73.2 billion, including corporate, agricultural and residential loans.

The Indian financial sector saw a rush of foreign investments last year. Japan’s MUFG announced in December that it would acquire a 20% stake in Shriram Finance for $4.4 billion. Blackstone agreed in October to pay about $700 million for a 9.9% stake in Federal Bank of India.

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