MC EXCLUSIVE After dropping IPO plan, Warburg, Mubadala-backed NBFC Avanse plans $152-mn rights issue

Avanse Financial Services Limited

Education loan provider Avanse Financial Services is planning to raise Rs 1,374 crore, approximately $152 million, from its existing shareholders such as Warburg Pincus, Kedaara Capital, Mubadala and others, two people aware of the development told Moneycontrol, on the condition of anonymity. This, after Avanse recently scrapped its IPO plans following global macro headwinds, which have adversely affected overseas education demand

Avanse is the second-largest non-banking financial company (NBFC) in the education loan segment with expertise in the overseas education loan segment.

The NBFC’s board approved a rights issue to raise the amount in a meeting held on December 17, the people cited said.

The rights issue plan comes after the NBFC dropped its initial public offering plan amid headwinds in the overseas education market ---especially in the USA, the biggest market for Indian students --- due to President Donald Trump’s stricter visa policies.

Avanse planned to raise Rs 1,000 crore in the IPO through issuance of fresh equity shares, while its private equity shareholders Warburg Pincus, International Finance Corporation and Kedaara Capital planned to sell shares worth Rs 2,500 crore.

Warburg is the majority shareholder of Avanse, holding a 59 percent stake, while IFC, Kedaara and Mubadala hold over 10 percent each and Avendus Future Leaders Fund holds a small 1.12 percent stake, as per the company’s draft prospectus filed in July 2024. 

The IPO had received market regulator Securities and Exchange Board of India’s (SEBI) approval in late October 2024. The IPO approval has since lapsed as SEBI approval for an IPO is valid for 12 months only, post which a company has to file a new draft red herring prospectus with the regulator. The people cited above added that the company has recently amended its articles to restore special rights for the private equity shareholders as per the terms of their investment agreements, indicating that the company may not approach the IPO market in the near term.

As per SEBI norms, any special rights provided to pre-IPO shareholders have to be removed at the time of the IPO. These rights can later be reinstated post listing by putting them to a shareholder vote.

“This seems to be an industry speculation about our organisation. As a practice, we do not comment on such speculations,” a spokesperson for Avanse Financial Services said in an email response to a Moneycontrol query.

Avanse Financial Services’ assets under management (AUM) stood at Rs 21,713 crore as on September 30, 2025, with overseas education loans contributing 80.4 percent of the AUM, as per a November 27 report by credit rating agency ICRA.

The credit rating agency noted that the NBFC’s portfolio is geographically concentrated with the United States, the United Kingdom (UK) and Canada accounting for 91.6% of Avanse’s overseas education loan portfolio as on September 30, 2025.

The US accounted for the biggest market for Avanse with a 41 percent share, followed by the UK at 39 percent and Canada at 10 percent.

“ICRA draws comfort from the fact that almost the entire overseas education loan book catered to postgraduate courses as on September 30, 2025. Applicants in these courses have higher prospects of gaining employment compared to undergraduates, partially mitigating concerns regarding their repayment ability,” the rating agency commented.

The NBFC reported a profit of Rs 508 crore for FY25, compared to a profit of Rs 342 crore in the previous financial year.