PE Firms Up Stake In Manappuram, Buy Shares From Promoter For $29M


  • 14 Mar 2012

Baring Private Equity Partners India (Baring PE India) and Sequoia Capital India have increased their stake in gold loan retailer Manappuram Finance Ltd, buying shares from its promoter chairman V P Nandakumar.

Nandakumar sold around a 4.3 per cent stake in the company on Wednesday for Rs 144.65 crore ($29 million) as he looks to repay deposits taken by his privately held firm, Manappuram Agro Farms.

The current stake sale brings down promoter holding in Manappuram from 36.3 per cent (as of end 2011) to 32 per cent.


The share price of Manappuram closed at Rs 46 on Wednesday, up 3.6 per cent in a strong Mumbai market. The sale was done at Rs 40 per share, which is a 13 per cent discount to today's closing price and a 9 per cent discount to Tuesday's closing price of Rs 44.4.

With this transaction, Baring India and Sequoia have increased their holding in the company to approximately 2.65 per cent and 3.71 per cent, respectively. Another entity called Bric II Mauritius Trading, which is reported to be an arm of Siguler Guff (a limited partner in Baring India funds), has also picked up shares worth Rs 20 crore, as NSE data.

Baring India has invested Rs 41.4 crore in the latest round of investment. The private equity firm has been bullish on the gold loan business, with an additional investment in Muthoot Finance.


Sequoia Capital has bought shares worth Rs 53.83 crore with latest purchase through its entities. Sequoia had earlier invested $14 million in Manappuram through a fresh issue in 2007 and exited through a market sale in April 2010, making 5x in the process. This time Sequoia has been buying into the company through open market.

For the first nine months of FY12, Manappuram Finance reported 142 per cent increase in total income to Rs 1,839 crore with net profit zooming 123 per cent to Rs 404.5 crore.

Thefirm came under pressure last month when Reserve Bank of India (RBI) warned it against


accepting any public deposits. While Manappuram Finance said it was not taking any deposits, one of the firms privately held by its promoters - Manappuram Agro Farms - was accepting deposits through its branches and offices.

At that time Nandakumar said Manappuram Agro is now repaying the deposits. "I intend to repay all outstanding public deposits of Manappuram Agro Farms and honour all such obligations such that no inconvenience is caused to depositors," Nandakumar reiterated in a statement to BSE today.

Previously named Manappuram General Finance and Leasing Ltd, it was registered as a deposit taking NBFC but was converted into a non-deposit taking NBFC in March 2011 by RBI.


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