Mumbai: Mortgage lender Aavas Financiers Ltd has started talks with investment banks for an initial public offering (IPO), three people aware of the matter 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 firms Partners Group and Kedaara Capital acquired it for Rs900-1,000 crore.
“Aavas Financiers has started discussions on going public. They have started meeting investment banks for the same. The proposed 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," said one of the people cited above, requesting anonymity as he is not authorized to speak with the media.
The talks are at an early stage and the firm and its investors are yet to finalize the quantum of primary and secondary share sales, he added.
Aavas provided affordable housing loans, primarily in the underserved markets of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh and Delhi.
Partners Group declined to comment on queries regarding the company’s IPO plans, while emails sent to Manish Kejriwal, managing partner of Kedaara Capital and Aavas Financiers Ltd were not answered.
According to the second person cited above, Aavas Financiers wants to go public before the general election in 2019. “Compared with last year, the markets are already quite volatile this year and the period before general election is usually expected to see volatility. Hence, companies that are in a state of preparedness are looking to take their deals to the market within 2018, if possible," he said. He, too, requested anonymity.
In 2016-17, Aavas Financiers reported a revenue of Rs313.9 crore, a 59.5% jump over the Rs196.9 crore 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.
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).
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 Manyawar is also planning to go public, Mint reported in January