Mannapuram Finance gets growth boost from Bain Capital’s stake acquisition

It will enable the Indian gold lender to invest in new age tech like AI, for example.

Mannapuram Finance’s corporate finance is expected to get a boost from Bain Capital’s recent stake acquisition.

On 20 March, US-based private investment firm Bain Capital announced that it is buying an 18% stake at the India-based goal loan provider for $508m.

The transaction is expected to provide Manappuram with growth capital to focus on its core product of gold-backed loans and on other secured loans, said S&P Global Ratings.

The partnership with Bain Capital will also reportedly enable Manappuram to invest in new-age technologies such as machine learning and AI.

This will drive innovation and enhance the company's competitiveness and underwriting standards, particularly for its secured loan product offerings, S&P added.

“We continue to assess [Mannapuram’s] capital and earnings as very strong, with the risk-adjusted capital ratio likely to exceed the 31 March 2024, level of 30% after the transaction,” the ratings agency said.

The stake acquisition comes at a time when Mannapuram has recently faced elevated reputational risks. The Indian central bank had imposed curbs on its microfinance business in October 2024.

“Given the ongoing stress in India's microfinance sector and heightened regulatory scrutiny, we believe the share of microfinance loans in Manappuram's assets under management (AUM) could gradually reduce,” S&P said.

“We also see a possibility that Manappuram could monetize its subsidiary Asirvad Micro Finance in the medium term and focus on secured lending, subject to market conditions,” it added.

Gold-backed loans accounted for about 55% of Manappuram's AUM, microfinance about 21%, with the remaining mainly toward affordable housing, vehicle finance, and micro, small, and medium enterprises, as of 31 December 2024.