India's Manappuram Finance saw a 6% rise in its shares following news that Bain Capital intended to acquire an 18% stake and collaborate in overseeing the gold loan firm, assisting in the implementation of its management succession strategy.

Bain Capital, a U.S. private equity company, will buy Manappuram's shares and warrants for 236 rupees each, marking a 9% premium over Thursday's closing price of 217.5 rupees.

This $508 million investment will give Bain Capital joint control of Manappuram alongside other major shareholders, known as 'promoters' in India.

Manappuram's shares reached a record high of 231.08 rupees, a 6.3% increase, by midday. Founder and CEO V.P. Nandakumar, set to become the non-executive chairman post the investment, has been leading the company for nearly 40 years, with attention now turning to selecting new leadership.

Bain Capital will have a say in strategic decisions at Manappuram, including the ability to nominate key positions like the CEO, a move applauded by analysts from Jefferies and CLSA as a positive outcome of the deal.

Both Jefferies and CLSA upped their price targets for the stock by 14.6% and 20%, respectively, advising a "buy" or "outperform" rating post announcement.

The deal, coming at a time of lucrative gold prices, is expected to be finalized in the upcoming fiscal year and drive growth in Manappuram's gold loan sector, which currently accounts for 75% of the company's total revenue.

To offset losses in the microfinance wing, capital from the stake sale might be allocated, with regulatory uncertainties impacting business conditions as Asirvad Micro Finance withdrew its IPO draft papers, as per Manappuram.