Bain Capital Seeks Approval from CCI for Stake Acquisition in Manappuram Finance

Bain Capital has approached the Competition Commission of India (CCI) for approval to acquire a substantial stake in Manappuram Finance. This acquisition will be executed through a complex, multi-layered transaction. Bain Capital plans to use its affiliates, BC Asia Investments XXV and BC Asia Investments XIV, to secure stakes in Manappuram Finance Ltd (MFL).

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Proposed Transaction Details

The transaction is structured in four phases. Initially, BC Asia Investments XXV will subscribe to 9.29 crore fully paid-up equity shares of MFL via private placement and preferential allotment. Additionally, BC Asia Investments XIV plans to subscribe to 9,29,01,373 warrants of MFL. These warrants can be converted into equity shares within 4 to 18 months from their allotment date.

Furthermore, BC Asia Investments XXV and associated parties aim to purchase up to 24.42 crore fully paid-up equity shares through an open offer. This represents 26% of the expanded voting share capital from MFL's public shareholders. The transaction is expected to trigger a mandatory open offer under SEBI's Substantial Acquisition of Shares and Takeovers (SAST) rules.

Additional Acquisition Plans

In addition to acquiring stakes in MFL, the proposed deal includes Manappuram Finance acquiring Manappuram Asset Finance Ltd (MAFL). The notification for this transaction has been filed under section 5a of the Competition Act, 2002. MFL primarily offers gold loans, vehicle loans, and MSME loans, while MAFL focuses mainly on gold loans.

Despite no direct overlaps between Bain Capital's portfolio entities and MFL or MAFL, there are some notional horizontal overlaps. However, these are not expected to significantly impact competition in India. Bain Capital had previously announced in March that it entered definitive agreements for joint control of MFL with existing promoters through its affiliates.

Investment Commitment

Bain Capital is set to invest Rs 4,385 crore to acquire an 18% stake in MFL on a fully diluted basis. This investment will be made through preferential allotment of equity and warrants. The acquisition aims to strengthen Bain Capital's presence in the financial sector by leveraging MFL's diverse loan offerings.

The proposed acquisition reflects Bain Capital's strategic interest in expanding its footprint in India's financial services sector. By partnering with existing promoters, Bain Capital aims to enhance its influence within Manappuram Finance while ensuring compliance with regulatory requirements.

With inputs from PTI