Manappuram Stock Fall: News of RBI's green signal on Ben deal, shares crash below 300:

News Topical, Digital Desk : According to news agency Reuters, Mannapuram Finance shares fell sharply on Wednesday, falling 5% to below ₹300. The reason is a major exclusive report claiming that Bain Capital's deal to acquire a controlling stake in Mannapuram has been hampered by RBI concerns. According to the report, the RBI has concerns about Bain's existing control in another lender in India. This is why Mannapuram's major deal has been stalled.

RBI's major objection to the deal:
According to the report, the Reserve Bank of India objects to the fact that Bain Capital already holds a controlling interest in another Indian NBFC, Tiger Capital. The RBI has a clear rule that no investor can control more than one lender (whether a bank or an NBFC). In several previous cases, the RBI has also taken a tough stand on private equity firms holding more than 20% stake. This is why the deal between Bain and Mannapuram is now mired in uncertainty.

What is Bain Capital doing?
According to sources, Bain Capital is now exploring a phased divestment, i.e., a gradual reduction of its stake, in Tyger Capital to meet RBI requirements. Bain holds a 93% stake in Tyger, which it acquired from the Adani family in 2023. The investment in Manappuram is to be made through Bain's two fund units—BC Asia Investments XXV and BC Asia Investments XIV. However, the RBI is currently unconvinced by Bain's "separate fund, separate team" argument for the transfer.

What is the structure of the deal? Bain Capital planned to first acquire an 18% stake for approximately 44 billion rupees ($488 million), then make an open offer for an additional 26%. If this deal had gone through, Bain would have become the joint controlling shareholder of Manappuram and could have played a major role at the management level.

Manappuram Finance and Tyger's Business Manappuram Finance has a total loan book of ₹3.15 lakh crore (₹315 billion), and its core business is gold loans, a rapidly growing segment in India. Meanwhile, Tyger Capital's loan book is much smaller—₹73.2 billion—and includes business, farm, and home loans.

The regulator's final decision is necessary. The Bain Manappuram deal has received approval from the Securities and Exchange Board of India (SEBI) and the Competition Commission. However, the final decision on a large stake in the NBFC sector rests with the RBI. Now, the RBI's "control over multiple lenders" rule has raised significant doubts about the deal. Why did the stock fall? The market had hoped that this deal would be a major game-changer for Manappuram—giving the company a strong global investor. The capital infusion would have accelerated growth and improved the company's rating and credibility in the repo-linked NBFC sector. However, now that the deal has been delayed, investors have resorted to sharp selling.