A major private equity transaction in India’s lending sector has stalled, with the regulator and the investor seemingly at odds over structure.
The Reserve Bank of India (RBI) has reportedly raised objections to Bain Capital’s plan to acquire a controlling stake in gold loan major Manappuram Finance, citing concerns over the firm’s existing ownership of another Indian lender, Tyger Capital.
🛑 THE CORE CONFLICT:
- The Rule: The RBI generally opposes a single investor holding controlling stakes (>20%) in multiple lending entities to prevent concentration risk.
- The Overlap: Bain already owns 93% of Tyger Capital (formerly Adani Capital), acquired in 2023.
- The Argument: Bain reportedly argued that the Manappuram investment comes from different funds (BC Asia) than the Tyger investment (Special Situations), but the regulator views the beneficial ownership as connected.
🗣️ THE DENIALS & CONFUSION: Unlike a standard delay, the parties are pushing back on the narrative:
- Bain’s Stance: In a statement, Bain Capital Special Situations explicitly stated it “does not have any plans currently to sell a controlling stake” in Tyger Capital, contradicting reports that a divestment was on the table to satisfy the RBI.
- Manappuram’s Stance: The lender called the report “factually incorrect and speculative,” though it admitted that RBI approval is still “pending” and clarifications have been sought.
📉 MARKET IMPACT:
- Manappuram (MNFL): Shares closed down 7.8% as the uncertainty spooked investors.
- The Deal: Bain proposed buying ~18% for $490 million plus an open offer for 26%, aiming for co-promoter status.
💡 ANALYST TAKEAWAY: This is a test case for “Financial Sponsor” definitions in India. If the RBI holds firm that different funds under the same PE brand constitute a single owner, it severely limits the “Platform Strategy” for global buyout firms. Bain now faces a difficult choice: convince the RBI that Chinese walls exist between its funds, or eventually choose between scaling Manappuram ($3.5B assets) or keeping Tyger.
👇 India Dealmakers: Can global PE firms effectively run multiple NBFC strategies under current RBI norms, or is consolidation inevitable?