Avanse Financial Services IPO, a prominent education-focused Non-Banking Financial Company (NBFC) in India, is set to launch its Initial Public Offering (IPO) to raise approximately ₹3,500 crore.
Who is the owner of Avanse?
Avanse Financial Services is backed by Warburg Pincus, a leading global private equity firm. Specifically, it is owned by:
- Olive Vine Investment: An affiliate of Warburg Pincus, which holds a significant stake in Avanse.
- International Finance Corporation (IFC): A part of the World Bank Group, also holds a minority stake in the company.
These entities have played a key role in supporting Avanse’s growth and strategic direction. The planned IPO includes a partial divestment of shares by these investors.
What is the value of Avanse IPO?
Avanse Financial Services, an Indian education loan financier backed by Warburg Pincus, has filed for an initial public offering (IPO) valued at ₹3,500 crore (approximately $419 million).
The IPO comprises two components:
(1) Fresh Issue: New equity shares worth ₹1,000 crore, intended to expand Avanse’s capital base and support the growth of its business and assets.
(2) Offer for Sale (OFS): Existing shareholders will sell shares totaling ₹2,500 crore. Notable participants in the OFS include:
- Olive Vine Investment, offering shares worth up to ₹1,758 crore.
- International Finance Corporation (IFC), selling shares worth ₹342 crore.
- Kedaara Capital Growth Fund III, divesting shares worth ₹400 crore.
What is the net worth of Avanse?
As of September 30, 2024, Avanse Financial Services reported a net worth of ₹3,913 crore (approximately $470 million).
In the financial year 2023-24 (FY24), the company achieved a net profit of ₹342.4 crore, more than doubling from ₹157.7 crore in the previous fiscal year.
Additionally, as of March 22, 2024, Avanse was valued at $1.2 billion.
These figures highlight Avanse’s significant growth and robust financial health in the education financing sector.
Avanse Financial Services IPO parent company
The parent company of Avanse Financial Services is Warburg Pincus, a leading global private equity firm.
Avanse operates under the ownership of Olive Vine Investment, an affiliate of Warburg Pincus, which holds the majority stake in the company. Other notable stakeholders include the International Finance Corporation (IFC) and Kedaara Capital Growth Fund III.
Warburg Pincus has been instrumental in Avanse’s growth, focusing on its education financing business and supporting its expansion strategies. The upcoming IPO will involve the sale of shares by these stakeholders.
Avanse financial services ipo review
Avanse Financial Services, a prominent education-focused Non-Banking Financial Company (NBFC) in India, is set to launch its Initial Public Offering (IPO) to raise approximately ₹3,500 crore.
IPO Structure:
- Fresh Issue: ₹1,000 crore, aimed at augmenting the company’s capital base to support future growth and business expansion.
- Offer for Sale (OFS): ₹2,500 crore, allowing existing shareholders to divest part of their holdings.
Company Overview:
Established in 2013, Avanse Financial Services specializes in providing education loans to students for both domestic and international studies, as well as financing educational institutions. As of March 31, 2024, the company reported Assets Under Management (AUM) of ₹13,303 crore, reflecting a Compound Annual Growth Rate (CAGR) of 65.86% between March 31, 2022, and March 31, 2024.
Financial Performance:
- Revenue Growth: The company reported a total income of ₹1,728.81 crore for the financial year 2024, a significant increase from ₹990.23 crore in 2023, indicating robust growth in its operations.
- Profitability: Net profit for the year surged to ₹342.4 crore in FY2024 from ₹157.71 crore in FY2023, showcasing enhanced profitability.
- Earnings Per Share (EPS): The diluted EPS rose from ₹3.78 in March 2022 to ₹15.05 by March 2024, reflecting higher earnings per share for investors.
- Return on Net Worth (RoNW): Increased from 6.26% to 9.31%, indicating an improvement in the company’s ability to generate returns on shareholder equity.
Market Position:
According to CRISIL, Avanse is the second-largest education-focused NBFC in India by AUM and disbursements as of March 31, 2024. The company has supported over 35,000 students attending more than 1,200 universities and colleges across 41 countries.
Considerations for Investors:
- Growth Potential: The Indian education finance market is expanding rapidly, and Avanse’s strong market position and comprehensive product offerings make it well-positioned to capitalize on this growth.
- Financial Health: The company’s consistent revenue growth, increasing profitability, and improving financial ratios indicate robust financial health.
- Risks: As with any investment, potential investors should consider market competition, regulatory changes, and economic factors that could impact the company’s performance.
Avanse financial services ipo Growth
Here is a table summarizing the growth and financial performance of Avanse Financial Services in recent years, based on available data:
| Metric | FY2022 | FY2023 | FY2024 | Growth (CAGR) |
| Assets Under Management (AUM) | ₹7,207 crore | ₹10,050 crore | ₹13,303 crore | 65.86% |
| Total Revenue | ₹686.93 crore | ₹990.23 crore | ₹1,728.81 crore | 58.29% |
| Net Profit (PAT) | ₹71.8 crore | ₹157.71 crore | ₹342.4 crore | 97.38% |
| Earnings Per Share (EPS) | ₹3.78 | ₹8.73 | ₹15.05 | – |
| Return on Net Worth (RoNW) | 6.26% | 8.17% | 9.31% | – |
Key Highlights of Growth:
AUM Expansion:
- The AUM grew from ₹7,207 crore in FY2022 to ₹13,303 crore in FY2024, showcasing strong market demand for education financing.
Revenue Growth:
- Total revenue surged from ₹686.93 crore in FY2022 to ₹1,728.81 crore in FY2024, indicating robust business operations.
Profitability:
- Net Profit (PAT) increased significantly, growing nearly fivefold from FY2022 to FY2024.
Improved Metrics:
- The EPS and RoNW have consistently improved, demonstrating better earnings efficiency and returns for shareholders.
Strengths of Avanse Financial Services IPO:
Strong Market Position:
- Avanse is the second-largest education-focused NBFC in India by AUM and disbursements as of March 31, 2024. Its niche focus on education financing gives it a competitive edge.
High Growth Potential:
- The education finance sector in India is expanding rapidly, driven by increasing demand for higher education and international studies. Avanse’s strong growth trajectory (AUM CAGR of 65.86% between FY2022 and FY2024) positions it well to capitalize on this trend.
Comprehensive Product Portfolio:
- Offers a wide range of education loans, including loans for higher studies, skill development, and financing for educational institutions. This diversified portfolio reduces reliance on any single segment.
Wide Distribution Network:
- Operates a pan-India hybrid distribution model with branches, digital platforms, and partnerships with education counselors and Direct Selling Agents (DSAs), ensuring a broad reach.
Improving Financial Metrics:
- Strong financial performance with consistent growth in revenue, profitability, and improved operational metrics like EPS and Return on Net Worth (RoNW).
Backing by Reputed Investors:
- Supported by prominent investors like Warburg Pincus and International Finance Corporation (IFC), which provide financial stability and credibility.
Risks of Avanse Financial Services IPO:
Concentration Risk:
- A significant portion of its business is focused on education financing, which may expose it to sector-specific risks, such as changes in education policies or reduced demand for loans during economic downturns.
Economic Sensitivity:
- The business is sensitive to macroeconomic factors like interest rate fluctuations, inflation, and employment trends, which can impact repayment rates and new loan disbursements.
Competition:
- Faces competition from other NBFCs, banks, and fintech companies that are entering the education financing space with innovative offerings and lower interest rates.
Asset Quality Concerns:
- A rise in non-performing assets (NPAs) or defaults, especially in the education loan segment, could impact profitability and require higher provisioning.
Regulatory Risks:
- Being an NBFC, Avanse is subject to stringent regulations by the Reserve Bank of India (RBI). Any changes in policies or compliance requirements could affect its operations.
Offer for Sale (OFS):
- A substantial portion of the IPO proceeds is from the OFS, where existing shareholders are divesting their stakes. This does not directly contribute to the company’s capital or growth.
Limited Diversification:
- While the company has a strong focus on education, it lacks diversification into other sectors, which could be a potential vulnerability in changing market conditions.
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