Warburg Pincus acquires controlling stake in Avanse Financial Services

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Published: August 1, 2019 1:57:32 AM

Private equity firm Warburg Pincus indicated on Wednesday it has completed acquiring a controlling equity stake of 80% in Avanse Financial Services, an education focused non-bank finance company (NBFC) that provides loans to students as well as institutions.

According to Avanse, the firm had assets under management (AUM) of Rs 2,852 crore with a profit before tax at Rs 41.49 crore, for the fiscal year 2019.

Private equity firm Warburg Pincus indicated on Wednesday it has completed acquiring a controlling equity stake of 80% in Avanse Financial Services, an education focused non-bank finance company (NBFC) that provides loans to students as well as institutions.

As part of this transaction, Warburg and the existing shareholder International Finance Corporation (IFC) will infuse Rs 300 crore in Avanse to strengthen its market position and provide growth impetus.

Dewan Housing Finance Corporation (DHFL), which held a 30.63% stake in Avanse, has sold its entire stake to Olive Vine Investment, an affiliate of Warburg Pincus Group, according to a stock exchange filing. The transaction included the sale of over 1.92 crore shares of Avanse. Wadhawan Global Capital, which held 49.04% stake in Avanse, has also made an exit.

Through this transaction, DHFL, Wadhawan Global Capital and other sellers including Kapil Wadhawan and Dheeraj Wadhawan, all forming part of promoter and promoter group of DHFL, have completely exited Avanse, DHFL stated in the filing.

Avanse provides loans designed to cater to the entire education lifecycle of student spanning from school to post graduation. This includes higher education loans for international and domestic studies, education loans for e-learning, school fee financing and education loans for skill development courses. It also provides loans for financing working and growth capital needs of educational institutes in India.

According to Avanse, the firm had assets under management (AUM) of Rs 2,852 crore with a profit before tax at Rs 41.49 crore, for the fiscal year 2019.

Narendra Ostawal, managing director at Warburg Pincus, believes specialised education financing players will play a strong role in helping meet aspirations of young Indians. “The primary capital infusion will meaningfully expand the company’s net worth. We expect the company’s stakeholders, including lenders and rating agencies, to welcome the ownership transition to a long term, well capitalised and patient investor in Warburg Pincus,” he said.

Amit Gainda, CEO at Avanse, told FE over a phone conversation that there are only a select few NBFCs that have been able to perform well in the education loan space. “I think we are in a unique segment. Banks haven’t done well in this space while select few NBFCs have performed exceptionally well. We want to build our balance sheet with a 10-year view and hopefully beyond. At what stage do we really think about listing? We haven’t thought about it yet,” he said.

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