Company: Investors: India Equity Partners, Barings Private Equity Partners In some investee companies, financial investors are playing more activist roles. For instance, last year, PE investors in gold-loan firm Manappuram Finance stepped in to stop the Kerala-based lender from using its branches to accept money for chit funds controlled by its promoter, VP Nandakumar.
Promoters control 31.55% of this non-banking finance company (NBFC), which takes gold as collateral to lend money, and around 25% is owned by a clutch of PE investors. In 2012, the banking regulator, the Reserve Bank of India, had cautioned Manappuram against accepting deposits from the public since it is classified as a non-deposit taking NBFC. PE firms, led by India Equity Partners and Barings Private Equity Partners, assigned KPMG to do an audit. Over a period of a month, around 300 KPMG officials carried out a forensic audit of Manappuram’s 3,125 branches. “There were corporate governance issues and we had to clean up the entire operations to ensure cross-selling of products and routing of money does not happen in the company,” says a person with one of the PE funds, on the condition of anonymity. The PE firms also brought pressure on Nandakumar to step down as chairman andbroughtinformerRBIdeputygovernor,Jagdish Capoor, in his place.