Investment firm Bain Capital on Monday sought the approval of fair trade regulator CCI to acquire a significant stake in non-banking financial company Manappuram Finance through a multi-layered deal.
According to the proposed deal, Bain Capital through its two affiliates — BC Asia Investments XXV and BC Asia Investments XIV — will acquire stakes in Manappuram Finance Ltd (MFL).
The proposed transaction involves four phases, where BC Asia Investments XXV will subscribe to 9.29 crore fully paid-up equity shares of MFL through private placement and preferential allotment.
Further, “subscription to 9,29,01,373 warrants of MFL by acquirer 2 (BC Asia Investments XIV), which can be exercised (in one or more tranches) at any point between 4 to 18 months from their date of allotment, each carrying a right to subscribe to 1 equity share of MFL”, is also proposed, said a notice filed with CCI (Competition Commission of India).
BC Asia Investments XXV and its persons acting in concert are also offering to purchase up to 24.42 crore fully paid-up equity shares through an open offer, representing 26 per cent of the expanded voting share capital from public shareholders of MFL, the notice said.
Thereafter, the transaction is expected to trigger a mandatory open offer under the Sebi’s SAST (Substantial Acquisition of Shares and Takeovers) rules.
Additionally, the proposed transaction also includes the acquisition of Manappuram Asset Finance Ltd (MAFL) by Manappuram Finance.
The proposed transaction is being notified under section 5(a) of the Competition Act, 2002, it added.
MFL primarily provides gold loans, vehicle loans, and MSME loans. It has expanded its offerings such as housing finance and microfinance. MAFL is mainly engaged in providing gold loans.
“There are no horizontal overlaps, vertical and/or complementary linkages between the business activities of acquirers and the targets (MFL and MAFL).
“However, certain portfolio entities of Bain Capital… exhibit notional and ancillary horizontal overlaps with the business activities of the targets which would not raise any appreciable adverse effect on competition (AAEC) in India,” the notice said.
In March this year, Bain Capital had announced that it entered into definitive agreements to acquire joint control in MFL through its affiliates, BC Asia Investments XXV and BC Asia Investments XIV, in partnership with the existing promoters.
As part of the agreement, Bain Capital will invest Rs 4,385 crore to acquire an 18 per cent stake of MFL on a fully diluted basis via preferential allotment of equity and warrants.
