Avanse Financial Services Files for Landmark IPO in Education Lending

Preeti Bali / 10:04 am / June 24, 2024

Avanse Financial Services, a leading provider of education loans backed by Warburg Pincus and other prominent investors, has taken a decisive step towards its public market debut. The company, headquartered in Mumbai, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise ₹3,500 crore through an initial public offering (IPO).

The IPO structure comprises two components: a fresh issuance of shares worth ₹1,000 crore to strengthen Avanse’s capital base and an offer for sale (OFS) of existing shares valued at ₹2,500 crore. Warburg Pincus, Kedaara Capital, and IFC are among the existing shareholders who will be offloading shares through the OFS.

A Pioneering Move in Education Financing

Avanse Financial Services is poised to become the first education-focused non-banking financial company (NBFC) in India to list publicly. This move underscores the company’s leadership role in crafting innovative financial solutions that cater specifically to education needs. Their comprehensive product suite encompasses student loans for both domestic and international studies, alongside infrastructure financing options for educational institutions across the country.

“We are thrilled about the prospect of expanding our investor base through this IPO,” remarked an Avanse Financial Services spokesperson. “The robust demand for education financing solutions, from students and institutions alike, fuels our growth trajectory.”

A Flourishing Market for Education Loans

Avanse’s public listing coincides with a burgeoning education loan market in India. As of December 2023, the total loan portfolio in this sector has reached a staggering ₹1.66 trillion. Avanse Financial, alongside established players like HDFC Credila, occupies a prominent position within the NBFC segment, complementing the dominant presence of major banks like State Bank of India (SBI).

Kotak Mahindra, Avendus Capital, JP Morgan, Nomura, Nuvama, and SBI Capital have been entrusted with managing the IPO process.

The anticipated listing is expected to equip Avanse Financial Services with greater financial flexibility. This will allow them to capitalize on the burgeoning opportunities within the education finance sector, both domestically and internationally.

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