Education-focussed NBFC Avanse Financial files for ₹3,500 cr IPO
Avanse Financial Services Limited, a homegrown education-focused non-banking financial company, has filed draft red herring prospectus (DRHP) with SEBI to raise ₹3,500 crore via initial public offering (IPO) route.
The IPO of global private equity firm Warburg Pincus-backed NBFC comprises fresh issue of equity shares of up to ₹1,000 crore and an offer for sale (OFS) of up to ₹2,500 crore by the existing shareholder with a face value of ₹5 each.
Under the OFS segment, shares worth up to ₹1,758 crore will be offloaded by Olive Vine Investment Ltd, a promoter entity; up to ₹342 crore by International Finance Corporation (IFC); and up to ₹400 crore by Kedaara Capital Growth Fund III LLP.
Olive Vine Investment, a Warburg Pincus affiliate, is the largest shareholder in the company with a 58.38% stake, while IFC and Kedaara Capital hold 11.36% and 13.82%, respectively.
Avanse intends to use fund raised from issuance of fresh equities for augmenting its capital base to meet future capital requirements arising out of growth of business and assets.
Established in 2013, Avanse is a new age, fast growing education focused NBFC that provides personalised education financing solutions to Indian student. The company aims to democratise education and education financing in India by offering solutions to education aspirant, while it also provides growth and working capital needs of educational institutes in the country.
Avanse is the second largest education focused NBFC in India by assets under management (AUM) as of March 31, 2024, as per CRISIL report mentioned in the DRHP. The AUM of the company has increased 2.75 times since March 31, 2022 at a CAGR of 65.86% from ₹4,835.6 crore to ₹13,303 crore as of March 31, 2024. During this period, the disbursements increased 2.16 times to ₹6,335 crore during the financial year 2024 from ₹2,928.5 crore during FY22, growing at a CAGR of 47.07%.
As of March 31, 2024, the company disbursed loans aggregating to ₹12,365.5 crore under student loan – international business since the commencement of its operations. The educational institution loan business had an AUM of ₹2,266.28 crore and accounted for 17.04% of the total AUM, with an average ticket size of ₹1.39 crore per loan.
On the financial front, the company reported net profit of ₹342 crore in the financial year ended March 31, 2024, which more than doubled from ₹158 crore in FY23 and grew significantly by over 5.42 times from ₹63.2 crore during FY22. The revenue from operation grew to ₹1,727 crore as compared to ₹990 crore at the end of March 31, 2023.
As of March 31, 2024, total borrowings, including debt securities, borrowings (other than debt securities) and subordinated liabilities, stood at ₹10,135 crore as compared to ₹7,210 crore in FY23. The company had a healthy return on equity (ROE) of 12.81% and return on assets (ROA) of 2.83% in the financial year 2024.
As per CRISIL report, education loans, which had the best asset quality and lowest GNPA across asset classes for NBFCs, recorded AUM growth from ₹7,500 crore during FY19 to ₹9,000 crore during FY21 and an estimated ₹41,800 crore during FY24, at a CAGR of 41.1% between financial years 2019 and 2024, and a CAGR of 65% between financial years 2021 and 2024.
Kotak Mahindra Capital Company Limited, Avendus Capital Private Limited, J.P. Morgan India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) and SBI Capital Markets Limited are the Book Running Lead Managers to the issue.
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