Avanse financial services is the second largest education-focused non-banking financial company (NBFC) in India by assets under management (AUM). The company offers a full stack of education products, including education loans for students and growth capital for education institutions through education infrastructure loans. The AUM has increased by 65.86% between March 31, 2022 and March 31, 2024.
The student loans – international business provides education loans to Indian students and professionals seeking higher education overseas. As of March 31, 2024, the student loans – international business had loans outstanding to 35,802 students attending 1,264 universities/colleges in 41 countries.
As of March 31, 2024, the company has serviced 545 locations in India, combining its physical branch network with its distribution network. The company has a large network of education counsellors and aggregators, providing wide coverage in the student loans sector. Education consultants and counsellors serve as trusted advisors for students pursuing overseas education.
Avanse financial services IPO Objectives
The Avanse financial services IPO offer comprises of a fresh Issue and an offer for sale
- All the money raised through offer for sale will go to selling shareholder / selling promoter and nothing from that will be entitled to the company. The offer for sale comprises of Rs. 2500 crores.
- The company proposes to utilize the proceeds from fresh issue towards boosting capital base.
Avanse financial services IPO Details:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | Rs 5 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to [●] Equity Shares |
| Aggregating up to ₹35,000.00 million | |
| Fresh Issue | Up to [●] Equity Shares |
| Aggregating up to ₹10,000.00 million | |
| Offer For Sale | Up to 6,526,983 Equity Shares |
| Aggregating up to ₹25,000.00 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Avanse financial services IPO Issue Price & Size
The issue price of Avanse financial services hasn’t been released yet. Upon releasing the dates, the investors can bid between these price ranges. The company has a fresh issue of Rs. 1000 crores and OFS of Rs. 2500 crores.
Avanse financial services IPO Launch Date
The IPO of this company is launching on (Opening Date XXXX), hence the opening date for bidding is (Open Date) and the IPO is closing on (Closing Date). Investors can bid in this IPO between these days during the primary market hours.
Avanse financial services Financial Statements:
| Parameter | FY24 | FY23 | FY22 |
| AUM | 133030.47 | 86460.68 | 48356.09 |
| AUM Growth (%) | 53.86 | 78.8 | 55.82 |
| Average AUM | 110927.94 | 68839.1 | 38253.37 |
| Term Loans (Gross) | 125208.55 | 84636.37 | 47909.19 |
| Term Loans (Gross) Growth (%) | 47.94 | 76.69 | 60.19 |
| Term Loans (Net) | 123968.2 | 83712.24 | 47159.87 |
| Disbursements | 63350.03 | 61416.31 | 29284.88 |
| Disbursement Growth (%) | 3.15 | 109.72 | 196.28 |
| Disbursement- Student loan – International | 47127.95 | 34079.94 | 15512.45 |
| Disbursement Growth - Student loan – International | 38.29 | 119.69 | 289.51 |
| Interest Income | 14437.28 | 8930.82 | 4764.5 |
| Fees and Commission Income | 1842.97 | 669.38 | 278.93 |
| Total Income | 17288.06 | 9902.29 | 5085.41 |
| Finance Costs | 8756.38 | 5398.43 | 2738.87 |
| Net Profit for the Year | 3424.03 | 1577.11 | 632.07 |
| Yield on Average Term Loans (Gross) (%) | 13.01 | 12.6 | 12.32 |
| Average Cost of borrowings | 9.72 | 8.9 | 8.76 |
| Net Interest Margin (%) | 4.85 | 4.68 | 4.96 |
| Operating Expense to Average AUM | 2.83 | 2.8 | 3.4 |
| Cost to Income Ratio | 36.84 | 42.74 | 55.45 |
| Credit cost to Average Term Loans (Gross) | 0.75 | 0.69 | 0.51 |
| Return on Average AUM (%) | 3.09 | 2.29 | 1.65 |
| Net carrying amount of state 3 loans | 161.28 | 144.84 | 251.88 |
| Gross Stage 3 Loans (%) | 0.43 | 0.56 | 1.29 |
| Provision Coverage Ratio | 69.7 | 69.32 | 59.31 |
| Capital to risk weighted assets ratio | 27.52 | 24.86 | 22.96 |
| Number of student loans – international outstanding | 47044 | 31601 | 19367 |
| Number of branches and sales representative offices | 19 | 16 | 16 |
Avanse financial services Financial Performance
The company has maintained its AUM growth rate, with AUM growing from Rs. 4835 crores in FY22 to 13,303 crores in FY24. The AUM has been growing at a CAGR of 65.86% between March 2022 and March 2024. However, the loan distribution has stagnated; reason could be due to higher base effect. Loan disbursements for periods FY 24, FY23, FY22 were Rs. 6,350 crores, Rs. 6,141.6 crores and Rs. 2,928 crores.
Net profit has grown to more than 5x between FY22 – FY24. During FY22, net profit was Rs. 63 crores, which rose to Rs 342 crores by FY24. Company’s net profit margin has kept stable in range around 4.75%.
Cost to income ratio has been coming down on year over year comparison, signifying higher operational efficiency.
Gross stage 3 loan in percentage term has been improving from 1.29% in FY22 to 0.43 in FY24. Whereas, net carrying amount of state 3 loans stand at Rs. 16.1 crores as of FY24.
Avanse financial services IPO Promoters & Shareholding of the Company
Olive Vine Investment Ltd (“Olive Vine”) is the promoter of the company, holding 58.38% of paid-up equity share capital in the company.
| Olive Vine Investment shareholder | No. of shares held | Percentage of shareholding |
| Warburg Pincus Financial Sector (Cayman), L.P. | 8,30,35,340.79 | 44.59 |
| Warburg Pincus (Callisto) Global Growth (Cayman), L.P | 2,61,56,612.46 | 14.05 |
| Warburg Pincus (Europa) Global Growth (Cayman), L.P | 2,52,92,523.86 | 13.58 |
| Warburg Pincus Global Growth-B (Cayman), L.P. | 1,85,27,767.43 | 9.95 |
| Warburg Pincus Global Growth-E (Cayman), L.P. | 1,50,55,677.41 | 8.08 |
| Warburg Pincus Financial Sector Partners (Cayman International), L.P. | 76,57,695.21 | 4.11 |
| Warburg Pincus Global Growth Partners (Cayman International), L.P. | 59,02,544.35 | 3.17 |
| Warburg Pincus Financial Sector-D (Cayman), L.P | 24,20,964.00 | 1.3 |
| WP Global Growth Partners (Cayman International), L.P | 21,78,874.50 | 1.17 |
Competitive strength
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India’s Second Largest Education Focused NBFC
Education loans in India have seen significant growth, with AUM growth from Rs. 7,500 crores in 2019 to Rs. 9,000 crores in 2021 and an estimated Rs. 41,800 crores in 2024. This growth is significantly higher than other asset classes, with NBFCs' share in the market increasing from 8% to 24%. As of March 31, 2024, an education-focused NBFC in India is the second largest by AUM and has the second highest disbursements and profit after tax for the same year.
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Pan-India Presence
The company operates a pan-Indian distribution network for student and educational institution loans, with a focus on education counselors, DSAs, and digital channels. As of FY24, the company serviced 545 locations in India, combining a physical branch network with a distribution network.
The company sources clients through flowing channels
- 66% through direct acquisition channels
- 43% through active education counselors and aggregators
- 78% through DSAs
- 13% loan service providers.
The company has invested in direct marketing channels as well as collaborates with education counselors for referrals in exchange of fees and a wide range of products and services.
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Vision to diversify
The company maintains a hybrid presence, combining a physical branch network with a distribution network. It plans to grow and diversify its distribution network by deepening relationships with existing educational service providers and DSAs, and actively recruiting new providers to widen its third-party distribution network. The company aims to invest in digital marketing campaigns to attract potential borrowers directly to its websites.
At the same time, the company aims to expand its coverage and product portfolio to cater to wider borrower categories. The company also plans to offer financing solutions for overseas undergraduate programs gradually.
Risk factors
- In 2019, Dewan Housing Finance Corporation (DHFL) sold entire stake in Avanse to Warburg Pincus group. The Erstwhile Promoter (DHFL) is currently under ongoing regulatory investigations by enforcement agencies under the PMLA Act, 2002. Any negative outcome on erstwhile prompter in relation to company may impact operation and image of the company.
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Concentration of channel distribution
The company operates a pan-Indian distribution strategy for student loans. For distribution of loan the company depends on different channels majorly being DSA and counselors & aggregators. As can be seen from tables below, companies networking with education counselors and agents play an important role in sourcing clients.
Relationship between company and sourcing agents are non-exclusive, so any disruption or negligence in their services could negatively impact the company's business
| Particulars | FY24 | FY23 | FY22 |
| Number of active counselors and aggregators | 320 | 255 | 190 |
| Number of active direct selling agents | 452 | 386 | 270 |
| Number of active loan service providers | 9 | 13 | 9 |
| In-house sales team members | 215 | 183 | 158 |
Following table shows the details of disbursements from different channels.
| Particulars | FY24 | FY23 | FY22 | |||
| Amount | % | Amount | % | Amount | % | |
| Counselors and aggregators | 23709.46 | 37.43 | 19145.8 | 31.18 | 9281.1 | 31.69 |
| Direct selling agents | 25201.74 | 39.78 | 17898.88 | 29.14 | 7108.58 | 24.27 |
| Direct Acquisition Channel | 11187.36 | 17.66 | 8450.9 | 13.76 | 4315.94 | 14.74 |
| Loan Service Provider | 3251.47 | 5.13 | 15920.73 | 25.92 | 8579.26 | 29.3 |
- Concentration of international loans & Macro factors
Jobs and employment depends excessively on the economic condition of nations. Currently, western nations are running on excess fiscal support, delinquency rates are going up, inflation is not coming down. The company's international business which is majorly sourced from USA, UK and Canada accounts for 95.18% of its AUM as of Mar 24. Any significant disruptions in these markets, such as changes in foreign policy, could directly impact company's operations, and potentially affect its results and cash flows.
| Geography | FY24 | FY23 | FY22 |
| % contribution to AUM | |||
| USA | 56.67 | 54.64 | 53.02 |
| UK | 22.85 | 19.9 | 11.93 |
| Canada | 15.66 | 19.92 | 25.26 |
| Others | 4.82 | 5.54 | 9.79 |
- Proportion of unsecured loans
As per financial statement, proposition increase in unsecured loan and Return on Average AUM (%) seem to have direct relation over the years. During FY22, return on average AUM was 1.29% and share of unsecured loan was 61.8%. In FY24 share of unsecured loan have increased by around 13%, whereas return on average AUM ahs increase to 3.09%. Any non-recovery of loans could negatively impact the company's financial and business directly.
| Particular | FY24 | FY23 | FY22 |
| Percentage of term loans (gross) (%) | |||
| Term Loans (Gross) | |||
| Secured by tangible assets | 19.48 | 21.52 | 32.35 |
| Secured by AR, FD, insurance policy, Govt. guarantee, etc | 6.28 | 3.08 | 5.85 |
| Unsecured | 74.24 | 72.4 | 61.8 |
- Interest rate risk
The company borrows heavily on floating interest rate and interest rates are highly sensitive to factors beyond anyone’s control. Any change in interest rates could affect our interest expense on floating interest-bearing liabilities, net interest income, and net interest margins.
| Particulars | FY24 | Fy23 | FY22 |
| (% of total borrowings) | |||
| Floating Rate Borrowings | 70.79 | 62.71 | 59.97 |
| Net Interest Margin | 4.85 | 4.68 | 4.96 |
| Particulars | FY24 | Fy23 | FY22 |
| Average Cost of Borrowings | 9.72 | 8.9 | 8.76 |
How to Apply for Avanse financial services IPO?
The Avanse financial services IPO GMP is not yet known as the IPO price is not disclosed. Once the IPO is open, the price will be disclosed and as per the demand and supply of the share price in the open market, the Avanse financial services IPO GMP will be known. If the IPO price is undervalued, less GMP and as per the valuation of the stock overvalued there is less chance for higher GMP.
How to Apply for Avanse financial services IPO?
If you have a share trading and demat account at Moneysukh, you can easily apply for the Avanse financial services IPO. Just follow the steps given below.
Step 1: Once Avanse financial services IPO opens you can apply online.
Step 2: Browse at trade.moneysukh.com and log in with your Moneysukh User ID & password.
Step 3: Now you have to visit the IPO section and select Avanse financial services IPO.
Step 4: Here just fill in the required such as bidding price, quantity or lot and so on.
Step 5: Now you have to make the payment and your IPO application is successful.
How to Check Avanse financial services IPO Allotment Status?
Just like applying, checking the Avanse financial services IPO Allotment Status is also very easy and hassle-free through Moneysukh online platform. You have to just wait till the IPO is closed and the allotment is finalized. If you have been allotted any share it will be transferred into your demat account that you can sell after listing of the shares on the NSE or BSE stock exchanges.
Also Read: How to Increase the Chances of IPO Allotment
However, if IPO is oversubscribed and unfortunately if you have not been allotted any share, your IPO application money will be returned to your bank account or linked account where you have allocated the fund while applying for the Avanse financial services IPO.
Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh
