Bain’s Manappuram Deal Faces Delay Over RBI Concerns: Reports

India’s central bank has raised objections to Bain Capital’s plan to acquire a controlling stake in Manappuram Finance, as the US-based private equity firm already holds a controlling interest in another Indian lender, three people with direct knowledge of the matter told Reuters.

Shares of Manappuram fell sharply on the news, extending losses to trade down about 10%.

The Reserve Bank of India discourages investors from controlling multiple lenders — whether banks or non-banks. Private equity firms that have held 20% or more in non-bank lenders have previously been required to divest holdings following RBI opposition. Bain, which announced its planned investment in the gold loan company last March, is exploring a phased divestment in Tyger Capital, a smaller lender, to address RBI’s concerns, one source said.

The sources requested anonymity as they were not authorised to speak to the media. When asked, Bain Capital Special Situations fund, which holds Bain's investment in Tyger Capital, said, "Bain Capital Special Situations is focused and fully committed to growing Tyger Capital to achieve its full potential in partnership with its management team, given the strong fundamentals and growth opportunities in the markets it serves."

"Bain Capital Special Situations has not announced, nor does it have any intentions or plans to currently sell a controlling stake in Tyger Capital."

The firm has already secured approvals for the Manappuram deal from India’s market regulator and competition commission, but RBI clearance is mandatory for any significant stake purchase in banks and non-bank lenders.

Manappuram, which specialises in loans backed by gold collateral, did not respond to a request for comment.

Under the proposed deal, Bain plans to acquire 18% of Manappuram for about Rs 4,400 crore ($488 million), followed by an open offer for an additional 26%, making Bain one of two controlling shareholders with the ability to influence management decisions. The investments would be routed through two Bain funds — BC Asia Investments XXV and BC Asia Investments XIV.

Bain currently owns 93% of non-bank lender Tyger Capital, formerly Adani Capital, after acquiring shares from the Adani family in 2023. That investment is held via Bain Capital Special Situations fund. Bain has argued that the Manappuram and Tyger investments are managed by separate funds and teams, but one source said this reasoning is unlikely to sway RBI.

Manappuram has a loan book of Rs ,crore ($3.5 billion), primarily focused on gold loans, while Tyger’s smaller asset base of Rs 73.2 billion includes business, farm, and home loans.

India’s financial sector has seen a surge in foreign investments recently. Japan’s MUFG announced in December it would acquire a 20% stake in Shriram Finance for $4.4 billion, while Blackstone agreed in October to pay about $700 million for a 9.9% stake in Federal Bank.