Bain Capital’s Acquisition Of Joint Control A Healthy Development For Manappuram Finance, Says Motilal Oswal

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Motilal Oswal Report

Bain Capital will invest ~Rs 43.85 billion in Manappuram Finance Ltd. to acquire ~18% stake on a fully diluted basis through a preferential allotment of equity shares and warrants at Rs 236/share (~30% above the six-month average trading price and ~9% higher than the current market price).

The transaction will trigger a mandatory open offer for the purchase of an additional ~26% stake in the company on an expanded capital basis (excluding warrants). The open offer price has been fixed at Rs 236/share.

After the completion of this transaction, Bain Capital will acquire ~18%- 41.7% stake in the company on a fully diluted basis, depending on the open offer uptake. Meanwhile, the stake of existing promoters will decline to 28.9% on a fully diluted basis (from ~35.3% held currently).

Following the transaction’s completion, Bain Capital will be classified as a promoter of the company and jointly control Manappuram Finance with existing promoters. Additionally, Bain will have the right to materially influence strategic decision-making, at Manappuram Finance as the Board will be reconstituted to include two nominee directors of Bain Capital.

The transaction is expected to close by Q2/Q3 FY26, subject to the receipt of necessary approvals.

After incorporating the total equity investments by Bain Capital over FY26 (and FY27), Manappuram Finance currently trades at 1x FY27E P/BV and 7x FY27E P/E.

While valuations are indeed attractive, what will be important for a re-rating (beyond the open offer price of Rs 236/share) is for investors to gain greater confidence in this strategic transformation attempt at Manappuram Finance.

We maintain our Neutral rating on the stock with a target price of Rs 240 (based on 1.1x Mar’27E consolidated book value per share).

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