Warburg-backed student lender Avanse files for Rs 3,500-crore IPO

Kotak Mahindra Capital, Avendus Capital, JP Morgan, Nomura Financial Advisory, Nuvama Wealth Management and SBI Capital Markets are the lead managers to the issue

Mumbai-based Avanse Financial Services , which is promoted by Warburg Pincus and also backed by Kedaara Capital and IFC, has filed draft papers with Sebi to raise Rs 3,500 crore via an initial public offer ( IPO).

On Jan 3, Moneycontrol was the first to report that Avanse had picked 6 bankers to go public and raise up to Rs 4000 crore in 2024.

If the plans of Avanse fructify, it would arguably be the first-ever listing by an education-focused NBFC in India.

The IPO consists of a fresh issue size of Rs 1,000 crore and an OFS ( offer for sale ) by Warburg Pincus, Kedaara Capital and IFC for Rs 2,500 crore, according to a copy of the draft red herring prospectus ( DRHP) reviewed by Moneycontrol.

According to the DRHP, the net proceeds of the IPO would be used by Avanse to augment its capital base to meet future capital requirements arising out of growth of our business and assets.

Kotak Mahindra Capital, Nomura, JP Morgan, Avendus Capital, Nuvama and SBI Capital are the investment banks working on the proposed listing of the firm.

On November 30, Moneycontrol had reported that Avanse was simultaneously looking to tap external investors and raise around Rs 1,000 crore in primary capital. Subsequently, Middle East investor Mubadala led the capital raise in March.

In March 2019, Warburg Pincus entered into definitive agreements to acquire an 80 percent stake in Avanse Financial Services held by Wadhavan Global Capital group. IFC had come on board way back in 2013. In January 2023, Kedaara Capital infused Rs 800 crore into the firm.

Avanse Financial Services provides loans across the following segments: student loans, loans for professionals and institution loans. As of March 31, 2024, it is the second largest education focused NBFC in India by assets under management ( AUM). The firm had the second highest disbursements during the Financial Year 2023 and recorded the second highest profit after tax in Financial Year 2024 among education focused NBFCs in India, according to its DRHP.

The firm's AUM has increased from Rs 48,35.6 crore as of March 31, 2022, to Rs 8646 crore as of March 31, 2023 and Rs 13,303 crore as of March 31, 2024, growing at a CAGR of 65.86 percent between March 31, 2022 and March 31, 2024.

Total income increased to Rs 1,729 crore for the Financial Year 2024 from  Rs 990 crore for the Financial Year 2023 and Rs 508.5 crore for the Financial Year 2022, and net profit for the year increased to Rs 342.4 crore for the Financial Year 2024 from Rs 158 crore for the Financial Year 2023 and Rs 63.2 crore for the Financial Year 2022.