RBI Greenlights Bain Capital's Rs 4,385 Crore Investment in Manappuram Finance

Introduction

The Reserve Bank of India (RBI) has granted its final approval for affiliates of Bain Capital to acquire joint control and a significant stake in Manappuram Finance. The clearance, communicated on February 13, 2026, concludes a nearly year-long process and paves the way for the private equity firm to complete its Rs 4,385 crore investment in the Kerala-based gold loan non-banking financial company (NBFC).

This regulatory green light marks a crucial milestone for both entities, ending a period of uncertainty that arose from regulatory concerns over Bain Capital's existing investments in the Indian financial sector. The approval allows the transaction, first announced in March 2025, to proceed to its final stages.

Transaction Structure and Details

The deal is structured in multiple parts, designed to give Bain Capital a substantial holding and joint control alongside the existing promoters. The definitive agreements, signed on March 20, 2025, outline an investment of approximately Rs 4,385 crore from two Bain-affiliated entities, BC Asia Investments XXV Limited and BC Asia Investments XIV Limited.

Initially, Bain Capital will acquire an 18% stake on a fully diluted basis. This will be executed through a preferential allotment of equity shares and warrants at a price of Rs 236 per share. This strategic investment triggers a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Bain Capital will make an offer to public shareholders to purchase up to an additional 26% stake at the same price. Depending on the subscription level of the open offer, Bain Capital's total shareholding will range from 18% to a maximum of 41.66%. Following the investment, the existing promoters will retain a 28.9% stake on a fully diluted basis.

A Challenging Regulatory Journey

The path to securing final approval was not straightforward. While the deal received clearances from the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI) in 2025, it faced significant scrutiny from the RBI. In January 2026, reports emerged that the central bank had raised objections, causing Manappuram Finance's shares to fall sharply.

The primary concern stemmed from Bain Capital's existing control over another Indian lender. The private equity firm holds a 93% stake in Tyger Capital (formerly Adani Capital), which it acquired in 2023. The RBI's policy generally discourages a single investor from exercising control over more than one lending institution to prevent conflicts of interest and reduce concentration risk in the financial system. This issue put the Manappuram transaction's timeline at risk, as regulators reviewed the potential for overlapping control.

Overcoming the Hurdles

In response to the regulatory concerns, Bain Capital was reportedly exploring a phased divestment of its stake in Tyger Capital to satisfy the RBI's requirements. Although Bain had argued that its investments in Manappuram and Tyger were managed by different funds and teams, the central bank's stance on ownership structures remained firm. Manappuram Finance issued clarifications to the stock exchanges on January 9, 2026, stating that the regulatory process was progressing and that approvals for management changes at its subsidiaries, Asirvad Micro Finance and Manappuram Home Finance, had already been secured in August and September 2025.

The final approval granted by the RBI this week indicates that a resolution acceptable to the regulator has been reached, clearing the final hurdle for one of the significant private equity deals in the Indian NBFC space.

Key Deal Summary

Management's Outlook and Future Direction

V.P. Nandakumar, the Managing Director and CEO of Manappuram Finance, described the regulatory clearance as a pivotal milestone. He stated that the partnership with Bain Capital reflects the strength of the company's governance and business model. With Bain's entry as a joint controlling shareholder, Manappuram aims to accelerate growth in its core business segments.

The capital infusion is expected to support investments in technology and risk management, facilitate the expansion of its branch network across India, and aid its transition into a professionally managed, future-ready financial services provider. As part of the agreement, the company's board will be reconstituted to include nominee directors from Bain Capital, who will play a key role in shaping its strategic direction.

Conclusion

With the RBI's final approval now secured, the Rs 4,385 crore transaction between Bain Capital and Manappuram Finance is set to be completed. This development ends months of regulatory uncertainty and marks the beginning of a new strategic partnership. The successful navigation of complex regulatory challenges underscores the increasing scrutiny on large private equity investments in India's financial sector. For Manappuram Finance, the deal provides significant capital and strategic expertise to fuel its next phase of growth and diversification.