Aavas Financiers IPO Review and list of anchor investors

Aavas is a retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India. A majority of its customers have limited access to formal banking credit. According to ICRA Report, the Company had the lowest GNPAs as of March 31, 2018, and the second highest growth rate of assets under management for the last three financial years, among affordable housing finance companies that had assets under management between Rs 25 billion and Rs 200 billion.


Aavas Financiers raises Rs 520 cr from 34 anchor investors

List of Anchor investors:


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IPO Dates & Price Band:

  • IPO Open: 25-September-2018
  • IPO Close: 27-September-2018
  • Issue Size: Approx Rs. 1734 Crore
  • Offer for Sale: 16,249,359 Equity Shares
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs. 818 to 821  Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%

Market Lot:

  • Shares: Apply for 18 Shares (Minimum Lot Size)
  • Amount: Rs.14,778

Allotment & Listing:

  • Basis of Allotment: 03-October-2018
  • Refunds: 04-October-2018
  • Credit to demat accounts: 05-October-2018
  • Listing: 06-October-2018

Lead Managers:

  • Edelweiss Capital Limited
  • HDFC Bank Limited
  • ICICI Securities Limited
  • Spark Capital Advisors (India) Private Limited
  • Citigroup Global Markets India Private Limited

Company Promoters:

  • Lake District Holdings Limited
  • Partners Group ESCL Limited

share holder

Main object of the issue:

The Offer comprises a Fresh Issue by our Company and an Offer for Sale by the Selling Shareholders.The object for which the Net Proceeds of the Fresh Issue will be utilized towards augmenting its capital base to meet its future capital requirements arising out of growth in the business.

Competitive Strengths:

The company has a strong distribution network with deep penetration serving underserved customers in rural and semi-urban markets.

In-house sourcing model is leading to superior business outcomes: A direct sourcing and collection system enables a company to optimally price offerings and maintains asset quality.

The company has implemented a robust and comprehensive credit assessment, risk management and collections framework to identify, monitor and manage risks inherent in operations.

The company has access to diversified and cost-effective long-term financing.

The company has made significant investments in information technology systems and implemented automated, digitized and other technology-enabled platforms and proprietary tools, to strengthen offerings and derive greater operational, cost and management efficiencies.

Company’s management team has extensive knowledge and understanding of the housing finance business and the expertise and vision to organically scale up business.


loan penetration

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The company intends to continue to expand in an on-ground contiguous manner, to drive greater and deeper penetration in the eight states in which it operates and sets up an additional 70 branches during Fiscal 2019.

The company plans to continue to focus on low and middle-income self-employed customers and increase the market share of existing products in the rural and semi-urban markets of India.

The company has been able to access cost-effective debt financing and reduced average cost of borrowings over the years due to several factors, including financial performance and improving credit ratings.

The company intends to increase product portfolio and improve cost efficiency through the use of technology and data analytics

The company intends to continue to undertake initiatives to increase the strength and recall of ‘Aavas’ brand to attract new customers.

world to gdpLoan penetration

loan penetration

The housing shortage in India

The housing shortage of india

CreditAccess IPO Review and the list of anchor investors


  • The company consistently delivered high-profit growth in the last five years.
  • It invested in creating capacity and increasing the number of branches, which helped its loan book grow at an annualized rate of 58.6 percent and profit at 71.3 percent.
  • Gross non-performing loans were 0.34 percent of total advances as of March, while its net interest margin is high at more than 7 percent.
  • Aavas has a strong capital adequacy ratio of 61.55 percent, leading to a lower return on equity of 11.2 percent in the year through March.

Ownership vs rented scenario

ownership vs rented


Aavas business requires substantial capital and any disruption in its sources of capital could have an adverse effect on its business, results of operations, financial condition and cash flows.

The risk of non-payment or default by borrowers may adversely affect its business, results of operations, financial condition and cash flows.

Aavas are affected by changes in interest rates for its lending and treasury operations, which could cause its net interest income to decline and adversely affect its business and results of operations.

Aavas downgrade in its credit ratings could increase its borrowing costs, affect its ability to obtain financing, and adversely affect its business, results of operations, financial condition and cash flows.

Aavas may face asset-liability mismatches, which could affect its liquidity and adversely affect its business and results of operations.

Aavas operations are concentrated in four states of western  India,  particularly Rajasthan and any adverse developments in this region could have an adverse effect on its business, results of operations, financial condition and cash flows.

Aavas inability to recover the full value of collateral, or amounts outstanding under defaulted loans in a timely manner, or at all, could adversely affect its results of operations.

The Indian housing finance industry is highly competitive and its inability to compete effectively could adversely affect its business and results of operations.

Aavas are exposed to operational and credit risks which may result in NPAs, and Aavas may be unable to control or reduce the level of NPAs in its portfolio.

Aavas Company and its Directors are involved in certain legal and other proceedings. Any adverse outcome in such proceedings may have an adverse effect on its business, results of operations and financial condition.

The bankruptcy code in India may affect its rights to recover loans from its customers.


At the upper end of the price band, the company demands a price that is 4.1 times its post-infusion book value for the year 2017-18. That’s higher than its established peers, especially when it offers a lower return on equity.

Comparison with Peers:


Grey market trend:

Current Grey market premium is Rs. 25/- ( Fall from Rs. 170/- )


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here

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