Mumbai Private equity firms, including Kedara Capital, are in talks with Warburg Pincus to buy some of its stake in education loan-focused non-banking financial company (NBFC) Avanse Financial Services Ltd, two people aware of the development said.
He said the deal would involve primary fundraising and secondary stake sale by Warburg Pincus.
He said investment banking firm Avendus Capital is managing the fundraising for Avanse.
As on March 31, the assets under management of NBFCs were 4,836 crore, growing at a compound annual growth rate (CAGR) of 22% over the last four years. Avanse has provided education loans to approximately 250,000 students, as well as development and working capital to 1,000 educational institutions serving the needs of over 500,000 students.
“Although there are 5-6 investors who are looking at this property, and the deal is still in the early stages, Kedara is the most serious bidder. Warburg will sell its stake through fundraising 500-700 crore, raising a similar or larger amount in primary fundraising to fuel the future growth of the lender,” said one of the two people above, requesting anonymity.
Email queries sent to Warburg Pincus, Avendus and Kedara did not elicit any response.
Warburg holds an 80% stake in the NBFC, while the rest is held by International Finance Corp, the private sector investment arm of the World Bank. Warburg acquired Avanse in 2019 from Wadhawan Global Capital and its group firm Dewan Housing Finance.
As per June 2022 report by ratings agency CareEdge, Avanse posted operating income of 469.68 crore in FY22, as compared to 438.89 crore in FY21.
NBFCs saw a rise in their profits 63.9 cr in FY22 37.9 crore in 2020-21.
“The AUM (assets under management) of the company witnessed moderate growth in the period of two years ended March 31, 2021, with the AUM growing from 2,852 crore as on March 31, 2019 3,103 crore as on March 31, 2021 due to a number of factors including closure and run-down of its MSME (Micro, Small and Medium Enterprises) and LFI (financial institutions) portfolios and the COVID-induced global slowdown. Closing of international borders by many countries.
With the reopening of international borders and an increase in the number of Indian students for overseas education, disbursements have grown exponentially FY21 to . 977 crore in 2,950 crore in FY22. This has resulted in an improvement in AUM 4836 crore till March 31,” the rating agency said in its report.
deborshi.c@htlive.com
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,