Avanse Turns to Rights Issue After Shelving IPO Amid Global Education Slowdown
Education-focused non-banking financial company (NBFC) Avanse Financial Services is set to raise ₹1,374 crore, or approximately $152 million, through a rights issue to its existing shareholders, including Warburg Pincus, Kedaara Capital and Mubadala. The move comes shortly after the company decided to drop its initial public offering (IPO) plans, citing challenging global macroeconomic conditions that have weighed on overseas education demand.
According to two people aware of the development, the NBFC’s board approved the rights issue at a meeting held on December 17. The fundraising will be entirely routed through existing investors, signalling continued sponsor confidence in Avanse’s long-term business prospects despite near-term market headwinds.
Rights Issue Seen as Strategic Capital Raise Amid IPO Uncertainty
The decision to pursue a rights issue follows Avanse’s move to shelve its IPO plans, which were initially cleared by the Securities and Exchange Board of India (SEBI) in late October 2024. Under the earlier IPO plan, Avanse aimed to raise ₹1,000 crore through fresh equity issuance, while private equity shareholders including Warburg Pincus, International Finance Corporation (IFC) and Kedaara Capital were set to offload shares worth ₹2,500 crore.
However, the IPO approval has since lapsed, as SEBI’s clearance remains valid for only 12 months. Any renewed attempt to go public would require Avanse to file a fresh draft red herring prospectus with the regulator.
Sources noted that Avanse has also amended its articles of association to restore special rights for private equity shareholders, as per the original investment agreements—another indication that the company may not tap public markets in the near term.
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Overseas Education Headwinds Trigger Strategic Rethink
The shelving of the IPO is closely linked to a slowdown in the overseas education market, particularly in the United States, which remains the largest destination for Indian students. Tighter visa norms and policy uncertainty under US President Donald Trump have dampened demand, impacting lenders with high exposure to overseas education loans.
Avanse is the second-largest NBFC in India’s education loan segment, with deep expertise in financing overseas education. While this positioning has driven strong growth in recent years, it has also increased sensitivity to global immigration and education trends.
A spokesperson for Avanse Financial Services declined to comment on the fundraising plans, stating, “This seems to be an industry speculation about our organisation. As a practice, we do not comment on such speculations.”
Shareholding Structure Reflects Strong Private Equity Backing
Avanse continues to enjoy strong backing from marquee global investors, a factor that underpins the success of the proposed rights issue. As per the company’s draft prospectus filed in July 2024:
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Warburg Pincus is the majority shareholder with a 59% stake
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IFC, Kedaara Capital and Mubadala hold over 10% each
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Avendus Future Leaders Fund owns a smaller 1.12% stake
Under SEBI regulations, special rights granted to pre-IPO investors must be removed at the time of listing. These rights can be reinstated post listing through shareholder approval, making the recent amendment to Avanse’s articles a notable signal of delayed IPO intent.
Loan Book Remains Heavily Skewed Towards Overseas Education
Despite near-term uncertainties, Avanse’s underlying business metrics remain robust. According to a November 27 report by credit rating agency ICRA, the NBFC’s assets under management (AUM) stood at ₹21,713 crore as of September 30, 2025.
Key highlights of Avanse’s loan portfolio include:
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Overseas education loans contribute 80.4% of total AUM
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Geographical concentration remains high, with the US, UK and Canada accounting for 91.6% of overseas loans
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The US alone accounts for 41%, followed by the UK at 39% and Canada at 10%
ICRA acknowledged the concentration risk but also highlighted mitigating factors linked to borrower profiles.
Postgraduate Focus Provides Comfort on Credit Quality
ICRA noted that Avanse’s overseas education loan book is predominantly skewed towards postgraduate courses, which typically offer better employment outcomes and repayment capacity.
“ICRA draws comfort from the fact that almost the entire overseas education loan book catered to postgraduate courses as on September 30, 2025. Applicants in these courses have higher prospects of gaining employment compared to undergraduates, partially mitigating concerns regarding their repayment ability,” the rating agency said.
This focus has helped Avanse maintain asset quality even amid global volatility in the education sector.
Profitability Remains Strong Despite Macro Challenges
Financially, Avanse has continued to deliver steady profitability. The NBFC reported a net profit of ₹508 crore for FY25, a sharp increase from ₹342 crore in the previous financial year. The earnings growth reflects stable disbursements, improving operating leverage and disciplined cost management.
Market observers believe the proposed rights issue will further strengthen Avanse’s capital base, enabling it to navigate short-term uncertainties while remaining well-positioned for a recovery in overseas education demand.
Investor Outlook Hinges on Global Policy Trends
While the rights issue provides immediate capital support, Avanse’s medium-term trajectory will depend on global visa policies, student mobility trends and the pace of recovery in key markets like the US and UK. For now, the company appears to be prioritising balance sheet strength and shareholder alignment over aggressive capital market plans.
For investors tracking education-focused NBFCs, Avanse’s strategy underscores a cautious yet resilient approach—balancing growth ambitions with the realities of a changing global education landscape.
