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Warburg-backed Avanse Financial Services files for Rs 3,500-cr IPO

Avanse is the first education-focused NBFC looking to go public

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Sundar Sethuraman Mumbai

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Avanse Financial Services, an education loan provider, has filed its draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India for a Rs 3,500-crore initial public offer (IPO). The Mumbai-based firm is looking to issue fresh shares worth Rs 1,000 crore through the IPO, which will be used to augment its capital base.

Private equity firms Warburg Pincus, Kedaara Capital and IFC plan to offload shares worth Rs 2,500 crore in the IPO. Avnase is the first education-focused non-banking finance company (NBFC) looking to go public.

The company offers products ranging from education loans for students to growth capital for education institutions through education infrastructure loans. Avanse provides loans and other value-added services to Indian students and professionals admitted to study overseas or at domestic institutions. The company also provides collateral-backed financing to private educational institutions in India.

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As of March 31, 2024, the company had loans outstanding to 35,802 students attending 1,264 universities/colleges in 41 countries as part of its international business.

Growing awareness and demand for higher education over the years has led to an explosion in demand for student loans. The overall educational loan portfolio stood at Rs 1.66 trillion as of December 2023, up from Rs 1.36 trillion in March 2023.

In India, banks account for 76 per cent of the total outstanding education loan portfolio, while the remaining is with NBFCs. State Bank of India (SBI) is the market leader among banks, while the NBFC space is dominated by HDFC Credila and Avanse Financial.

Avanse Financial's educational institution loan business has an asset under management (AUM) of Rs 22,663 crore, accounting for 17 per cent of its total AUM, with an average ticket size of Rs 1.4 crore per loan. Institutional loans are primarily provided for infrastructure development and other capital requirements, with flexible loan tenures. The company had outstanding loans to 1,990 educational institutions in India as of March 31, 2024. Kotak Mahindra, Avendus Capital, JP Morgan, Nomura, Nuvama, and SBI Capital are the bankers on the issue.

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First Published: Jun 21 2024 | 7:43 PM IST

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