Avanse IPO: SEBI Returns DRHP On Technical Grounds

SUMMARY

The regulator returned the IPO papers citing "non-compliance with Regulation 7(1)(a) of SEBI ICDR Regulations, 2018"

The NBFC will be free to refile its IPO papers as early as July 29

Avanse Financial Services’ IPO will comprise a fresh issue of shares worth INR 1,000 Cr and an OFS component of INR 2,500 Cr

Update | July 30, 4: 08 PM

SEBI has returned the draft red herring prospectus (DRHP) of non-banking financial company (NBFC) Avanse Financial Services. The regulator returned the IPO papers citing “non-compliance with Regulation 7(1)(a) of SEBI ICDR Regulations, 2018.”

According to the aforementioned section, an issuer has to make sure that it has applied to one or more stock exchanges to seek an in principle approval for listing of its specified securities on such stock exchanges and has chosen one of them as the designated stock exchange.

Original Story | July 26, 9:27 PM

The Securities and Exchange Board of India (SEBI) has reportedly returned the draft red herring prospectus (DRHP) of non-banking financial company (NBFC) Avanse Financial Services on “technical grounds”.

Moneycontrol reported, citing sources, that the “reason for sending back” the prospectus was “technical queries” and it was not a “rejection”. As per the report, the startup can refile the initial public offering (IPO) papers as early as Monday (July 29).

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This comes a month after the NBFC filed its DRHP. As per the draft documents, its IPO will comprise a fresh issue of shares worth INR 1,000 Cr and an offer for sale (OFS) component of INR 2,500 Cr.

Avanse plans to use the proceeds from the fresh issue to increase its capital base to fuel further expansion of its business.

Founded in 2013, Avanse offers education financing for students and educational institutions in India and also caters to students looking to study abroad. It also offers skill enhancement loans in India.

The NBFC is backed by the likes of Warburg Pincus, International Finance Corporation (IFC), Kedaara Capital, and Mubadala Investment Company.

As per its DRHP, Avanse clocked a net profit of INR 342.4 Cr in the financial year 2023-24 (FY24) as against INR 157.71 Cr in the previous fiscal year. Operating revenue nearly doubled to INR 1,726.9 Cr from INR 989.5 Cr in FY23.

The development comes at a time when the SEBI has increased the scrutiny of companies and startups looking to go public. Last month, the market regulator directed IPO-bound companies to share more information while filing their DRHPs with an aim to pace up approvals for public offerings.

Earlier this year, SEBI also directed kids-focussed omnichannel retailer FirstCry to refile its IPO papers with updated financial numbers and key performance indicators from the quarter ended December 2023. Afterwards, SEBI gave its go ahead for FirstCry’s IPO.

Last year, it also directed hospitality major OYO, insurtech giant Go Digit and fintech unicorn PayMate India to refile their DRHPs for a host of reasons. Of these, only Go Digit went ahead with its public listing plans.