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Avanse Financial Services Limited IPO is an IPO of ₹3,500 crores. It consists of an offer for sale of ₹2,500 crores and a fresh issue of ₹1,000 crores. The shares will be allotted on a date TBA. The credit of shares to the demat account will take place on a date TBA and the initiation of refunds will take place on a date TBA.
Detail | Information |
---|---|
Upper Price Band (₹) | TBA |
Existing Shares to be Sold | Aggregating up to ₹2500 crores |
Fresh Issue | Aggregating up to ₹1000 crores |
EPS (₹) For the year ended March 31, 2024 | 15.40 |
QIBs Share Offered | Not more than 50% of the Issue |
Non-Institutional Bidders (NIBs) | Not less than 15% of the Issue |
Retail Individual Bidders | Not less than 35% of the Issue |
Despite the banking system dominating financial services. NBFCs have become popular. NBFCs will continue to gain market share over banks due to their ability to provide flexible lending solutions and tailored services, focused approach to tap the under-served and niche customer markets, ability to penetrate deeper into geographies, leveraging technology to reinvent the lending process, strong origination skills and shorter turnaround time.
The education sector is expanding from all sides – students pursuing higher education and institutions expanding further. In India, the overall education market in fiscal 2024 is estimated at ~₹18.5-19.0 trillion, which includes both the overseas education market and the domestic education market. The growing number of individuals seeking higher education overseas and in India has led to an explosion in demand for student loans.
Avanse Financial Services Limited is an education-focused non-banking financial company (“NBFC”) operating in India. According to the CRISIL MI&A Report’s description of their business, they offer a full stack education offering with products ranging from education loans for students to growth capital for education institutions through education infrastructure loans. They also provide collateral-backed financing to private educational institutions in India.
India’s second largest education focused NBFC by AUM and disbursements, and operating in a large and growing addressable market in India.
According to the CRISIL MI&A Report, education loans recorded AUM growth from ₹75 billion during the Financial Year 2019 to ₹90 billion during Financial Year 2021 and an estimated ₹418 billion during Financial Year 2024, at a CAGR of 41.1% between Financial Years 2019 and 2024, and a CAGR of 65% between Financial Years 2021 and 2024, which is significantly higher than other asset classes. The CRISIL MI&A Report also describes that NBFCs’ share in the overall education loan market also increased from 8% as of March 31, 2019, to 24% as of December 31, 2023.
Pan-India, multi-channel distribution presence, enabling widespread coverage with limited reliance on branches.
They operate on a pan-India front and have a multi-channel distribution network across their student and educational institution loans businesses, with physical locations in major education hubs in India. According to the CRISIL MI&A Report, education loans focused NBFCs have a differentiated distribution approach with a higher degree of reliance on education counsellors, DSAs, and digital channels as compared to a physical branch network which is predominantly required for other traditional loans such as mortgages, MSMEs and LAP. As of March 31, 2024, they serviced 545 locations in India, maintaining a hybrid presence, and strategically combining a physical branch network of 19 branches and sales representative offices, staffed with a 215-member sales team, with their distribution network.
Technology and analytics-driven business, with scalable operating model.
Technology has been at the forefront of their operations to drive distribution reach, operational and collection efficiency and overall borrower experience. They have adopted a cloud first approach and their technology systems are scalable to cater to various student profiles, with enhanced application performance and cost efficiency. They have also implemented security solutions utilising an integrated security information and incident management tool. They also have an API-driven technology landscape, enabling them to handle the requirements of various product types.
The company’s student loans – international business is largely concentrated in the United States, Canada and the United Kingdom. This exposes them to political and macro-economic risks in these geographies, which could adversely affect their business, results of operations and cash flows.
The company is vulnerable to volatility in interest rates for both their borrowing and lending operations, which could cause their net interest income to vary and consequently, affect their profitability.
They rely significantly on their information technology systems and a breach of or cyber-attacks on their technology systems could adversely affect their business and lead to financial, legal, and reputational damage.
Particulars (in Rs. crores)
Particulars (in Rs. crores)
Since there are no listed peer companies that engage in a business similar to that of Avanse Financial Services Limited. Accordingly, it is not possible to provide an industry comparison in relation to the stated company.
The Anchor Investor Bid/Offer Period shall be one Working Day prior to the Bid/Offer Opening Date.
IPO Registrar and Book Running Lead Managers
Book running lead managers:
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) SBI Capital Markets Limited
Registrar for the IPO is Link Intime India Private Limited
The company earns its revenue through the following sources:
Their revenue from operations increased from ₹5082.84 crores in FY22 to ₹17,269.60 crores in FY24, clocking a whopping revenue growth of 239%. Their PAT increased from ₹854.60 crores in FY22 to ₹4592.92 crores in FY24. Their PAT grew at an astounding 437% over the two years.
As of March 31, 2024, they are the second largest education focused NBFC in India by assets under management (“AUM”). According to the CRISIL MI&A Report, they also have 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.
Parameter | FY22 | FY23 | FY24 |
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Total Income (₹ crores) | 508.541 | 990.229 | 1728.806 |
Profit Before Tax (₹ crores) | 85.46 | 211.315 | 459.292 |
Net profit (₹ crores) | 63.207 | 157.711 | 342.403 |
EBITDA (₹ crores) | 372.224 | 764.459 | 1355.536 |
EPS (₹) | 3.83 | 8.66 | 15.4 |
Parameter | FY22 | FY23 | FY24 |
---|---|---|---|
Profit before tax | 85.460 | 211.315 | 459.292 |
Net Cash from Operating Activities (₹ crores) | (1490.482) | (3532.520) | (3495.019) |
Net Cash from Investing Activities (₹ crores) | 37.252 | (37.169) | (43.017) |
Net Cash from Financing Activities (₹ crores) | 1659.729 | 4031.499 | 4051.719 |
Cash and Cash Equivalents (₹ crores) | 325.267 | 787.077 | 1300.760 |
You can check the allotment status of shares either on the website of the Bombay Stock Exchange (BSE) or on the website of the registrar Link Intime India Private Limited. To check the status on the BSE website:
Follow these steps to know the allotment status on the registrar’s website:
Here are the steps to apply for Avanse Financial Services Ltd IPO:
Step 1: Log in to your Kotak Securities Demat account Log in to your Demat account to access IPO investments. Next, select the current IPO section.
Step 2: Specify IPO details Enter the number of lots and the price you wish to apply for.
Step 3: Enter UPI ID After entering your UPI ID, click submit. This will place your bid with the exchange.
Step 4: Mandate Notification Your UPI app will receive a mandate notification to block funds.
Step 5: Approve Request Your funds will be blocked once you approve the mandate request on your UPI.
The Avanse Financial Services Limited IPO has an issue size of ₹3,500 crores. The IPO opens for subscription on TBA and closes on TBA.
Link Intime India Private Limited is the registrar for this IPO.
You may read more about Avanse Financial Services Limited and its IPO from the company’s red herring prospectus (RHP) here: (SEBI | Avanse Financial Services Limited DRHP)