Mumbai-based education finance non-banking financial company (NBFC) Avanse Financial Services, backed by global investors Warburg Pincus, Kedaara Capital, and Mubadala, is preparing to raise INR 1,374 crore (~USD 152 million) through a rights issue to existing shareholders. The move comes in the wake of the company’s decision to shelve its initial public offering (IPO) amid challenging macroeconomic conditions and declining overseas education demand.
Avanse Financial Rights Issue Follows Scrapped IPO Plans
According to people familiar with the development, Avanse’s board approved the capital raise during a 17 December board meeting. Avanse Financial rights issue will be subscribed primarily by existing backers, including Warburg Pincus (which holds 59%), International Finance Corporation (IFC), Kedaara Capital, and Mubadala, each with holdings above 10%, as well as Avendus Future Leaders Fund (1.12%).
The move signals a strategic shift toward private capital infusion, following the lapse of the company’s SEBI-approved IPO window. Avanse IPO, originally cleared by the Securities and Exchange Board of India (SEBI) in October 2024, was valid for 12 months but was not pursued due to deteriorating conditions in the international education market—particularly in the United States, which accounts for over 40% of its loan portfolio.
Avanse Financial IPO Delay & Regulatory Hurdles
Avanse Financial’s IPO journey has been complex. The NBFC initially filed its Draft Red Herring Prospectus (DRHP) in June 2024 for a INR 3,500 crore public offering, comprising an INR 1,000 crore fresh issue and a INR 2,500 crore offer for sale by existing investors. Warburg’s affiliate Olive Vine Investment was slated to offload shares worth INR 1,758 crore, while IFC and Kedaara were to sell stakes worth INR 342 crore and INR 400 crore, respectively.
However, regulatory friction arose when SEBI initially returned Avanse Financial IPO papers in late 2024, citing non-compliance with Regulation 7(1)(a) of SEBI’s ICDR Regulations, which mandates prior in-principle stock exchange approval for listing. Though Avanse later resubmitted its DRHP, macro headwinds—chiefly tightened U.S. visa norms and slowing international loan demand—prompted the company to delay listing plans indefinitely.
The decision to reinstate special rights for its private equity investors through amended articles of association further underscores that Avanse may not approach the IPO market again in the near term.
Financial Performance
Despite postponing its market debut, Avanse continues to post strong financial growth. Its Assets Under Management (AUM) surged from INR 4,835.6 crore in FY22 to INR 13,303 crore in FY24, and further to INR 21,713 crore as of September 2025, reflecting its deep penetration in the education finance sector.
Overseas education loans remain the core of Avanse’s business, comprising 80.4% of total AUM as of September 2025. The portfolio remains geographically concentrated, with the U.S., U.K., and Canada accounting for nearly 92% of the total. According to ICRA, postgraduate borrowers dominate Avanse’s customer base—an important factor supporting credit quality and repayment discipline.
Financially, Avanse has displayed a strong upward trajectory:
- Revenue: INR 989.6 crore in FY23 → INR 1,726.9 crore in FY24
- Net Profit: INR 157.7 crore in FY23 → INR 342.4 crore in FY24 → INR 508 crore (FY25 projected)
- Net Margin: Expanded from 12.4% (FY22) to 19.8% (FY24)
- Return on Equity (ROE): Improved from 6.5% in FY22 to 12.8% in FY24
- Debt-to-Equity Ratio: Declined from 4.06x in FY22 to 2.76x in FY24, indicating healthier leverage management.
Strategic Outlook
Avanse Financial rights issue is expected to bolster the company’s Tier-1 capital, enabling the NBFC to sustain growth and manage portfolio risks amid evolving regulatory and geopolitical dynamics. With overseas loan demand linked closely to global student mobility trends and U.S. visa policies, management appears to be prioritising balance sheet fortification over market listing.
Industry observers note that while India’s education loan segment continues to expand, the overseas education sub-sector has seen volatility due to changing immigration policies in Western markets. Avanse’s rights issue, therefore, represents a conservative yet prudent step—prioritizing capital adequacy and investor stability ahead of uncertain equity market conditions.
Conclusion
Avanse Financial Services’ shift from a public issue to a rights issue underscores the cautious recalibration many NBFCs are making amid global uncertainty. With backing from heavyweight investors and consistent profitability, the company remains well-positioned in India’s growing education finance space. However, its next growth phase will depend on policy stability in destination countries and domestic credit appetite, factors that continue to shape the broader education finance ecosystem.
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