Money & Banking

Warburg Pincus-led Avanse Financial eyes ₹10,000-crore AUM by FY23-24

KR Srivats New Delhi | Updated on November 12, 2019 Published on November 12, 2019

We want to emerge as domain specialist in the education finance space, says CEO

Avanse Financial Services, an education finance-focussed NBFC, is eyeing ₹10,000 crore in assets under management (AUM) by financial year 2023-24, said its Chief Executive Officer Amit Gainda.

The Warburg Pincus-controlled entity wants to be the “domain specialist” (in education finance), Gainda told BusinessLine.

“We are looking at sustainable growth of 15-20 per cent every year for the next three-to-four years and build a balance sheet of ₹9,000 crore to ₹10,000 crore by the end March 2024,” he said.

He expects all his three main lines of business — the education student lending business (55 per cent), education digital lending (10 per cent), and education institution lending business (about 30 per cent) — to drive growth in the coming years in the same proportion as now.

“In India and abroad, well run specialised models are far better poised in terms of profit maximisation. Those who have specialised in the sector and domain have done far better. So, we have also chosen to become a domain specialist,” he said.

It may be recalled that Warburg Pincus had, in March this year, entered into a share purchase agreement to acquire 80 per cent stake in Avanse.

Balance sheet size

As on date, Avanse has a balance sheet size of about ₹2,850 crore and expects to close this fiscal with a size of ₹3,100 crore. Nearly 55 per cent (₹1,700 crore) of its overall balance sheet is focussed on student loans.

As much as 80 per cent of Avanse’s student loans are for overseas studies.

“Nearly 95 per cent of my student loans are greater than ₹10 lakh. The myth that education loans have not done well is only for sub ₹4 lakh unsecured loans, where we don’t do anything at all,” he said.

At the industry level, education is a ₹91,000-crore market. The greater than ₹10 lakh loan market is ₹31,000 crore. Loans above ₹10 lakh are sub 1 per cent GNPA for the market. “The industry GNPA with 36 months seasoning is only 1 per cent. My asset quality is superior with sub 20 bps GNPA on a seven year balance sheet,” he said.

Avanse Financial Services is now second in the market in terms of assets. “ Our entire focus is on sourcing right, servicing right and asset quality,” he said.

After Warburg Pincus — the largest private equity player in India in terms of assets and profits took control — both shareholders (Warburg Pincus and IFC (20 per cent stake) together brought in ₹300 crore capital into Avanse.

“Going forward, strategically I want to build this business with a low leverage. My debt-to-equity ratio is sub 2.5,” he said, adding that the company has also now got fresh lines of bank credit after the parentage change this year.

Published on November 12, 2019
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