Aavas Financiers Ltd has hired investment banks to start work on its initial public offering (IPO) that could see the mortgage lender raise as much as Rs1,800 crore, three people aware of the matter said.
They have hired ICICI Securities, Edelweiss and Citigroup, said one of the three people cited above, requesting anonymity as he is not authorised to speak to reporters. The proposed IPO will see the home financier raise between Rs1,500 crore and Rs1,800 crore, he said.
Aavas, earlier known as AU Housing Finance, was the housing finance business of Jaipur-based small finance bank AU Small Finance Bank Ltd. In February 2016, Swiss investment firm Partners Group and Kedaara Capital acquired it for Rs900-1,000 crore. “The IPO will include a mix of primary and secondary share sale, with both Kedaara and Partners expected to sell part of their stakes through the IPO. They will, however, continue to retain a majority shareholding in the company. It will largely be a primary issuance to help shore up the company’s capital base and to boost its growth,” he said.
Aavas provides affordable housing loans, primarily in the underserved markets of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh and Delhi.
Emails sent to Aavas Financiers, Partners Group and Kedaara Capital did not elicit any response. Emails sent to ICICI Securities, Edelweiss and Citigroup too went unanswered. In 2016-17, Aavas Financiers reported a revenue of Rs313.9 crore, a 59.5% jump over the Rs196.9 crore of the previous fiscal, data from the firm’s filings with the Registrar of Companies (RoC) shows. In 2016-17, it reported a profit of Rs57.8 crore against a profit of Rs32 crore in the previous year.
The firm disbursed Rs3,444 crore in loans till 31 March 2017, since its inception. It started operations in 2012.
In 2016-17, it disbursed loans worth Rs1,391.6 crore, a growth of 32.5% over the previous year, filings show. The average loan size stood at Rs8.6 lakh.
From banks and small finance banks such as Bandhan Bank Ltd, Equitas Holdings Ltd and AU Small Finance Bank Ltd, to insurance firms such as ICICI Lombard General Insurance Co. Ltd and HDFC Standard Life Insurance Co. Ltd, the primary market has been dominated by banking and financial services companies in the last couple of years.
Other lenders preparing to go public include Everstone Capital-backed IndoStar Capital Finance Ltd, Spandana Sphoorty Financial Services Ltd and IFMR Capital (now known as Northern Arc Capital), CreditAccess Grameen Ltd, Arohan Financial Services Ltd and Muthoot Microfin Ltd.
Several of Kedaara Capital’s portfolio firms, too, have used the opportunity in the public markets to launch their initial share sales. AU Small Finance Bank and Mahindra Logistics Ltd went public last year, while another Kedaara portfolio firm Vedant Fashions, the owner of popular ethnic wear brand Manyavar, is also planning to go public, Mint reported in January.
