The IPO combines a fresh issue of up to Rs 885 crore and an offer of sale of up to Rs 565 crore by Corporate and Individual Selling Shareholders
FinTech BizNews Service
Mumbai, 17 December 2024: Gurugram-based Aye Finance Limited, a non-banking financial company – middle layer (“NBFC-ML”) focused on providing loans to micro-scale micro, small, and medium enterprises (“MSMEs”) across India, has filed its draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) to raise Rs 1,450 crore through an initial public offering (IPO).
The IPO, with a face value of Rs 2 per equity share, combines a fresh issue of up to Rs 885 crore and an offer of sale of up to Rs 565 crore by Corporate and Individual Selling Shareholders.
The offer for sale consists of the sale of equity shares up to ₹150 crores by LGT Capital Invest Mauritius PCC with Cell E/VP, up to ₹130 crore by CapitalG LP, up to ₹100 crore by A91 Emerging Fund I LLP, up to ₹100 crore by Alpha Wave India I LP, up to ₹56.04 crore by MAJ Invest Financial Inclusion Fund II K/S, up to ₹6.8 crore by CapitalG International LLC, up to ₹14.5 crore by Harleen Kaur Jetley, and up to ₹7.66 crore by Vikram Jetley.
Aye Finance reported strong operational performance, as of Fiscal 2024, it has one of the lowest Net NPAs among peer NBFCs, at 0.9%, alongside the highest provision coverage ratio of 72%.
Profitability, too, has soared—Profit After Tax (PAT) grew by a staggering 291.5%, rising from Rs43.9 crore in Fiscal 2023 to Rs171.7 crore in Fiscal 2024. Aye further strengthened its position with a Return on Equity (ROE) of 17.2% and a prudent debt-to-equity ratio of 2.8.
The proceeds from its fresh issuance will be utilized to augment its capital base to meet the Company’s future capital requirements arising out of the growth of its business and assets and general corporate purposes.
The company, in consultation with the book-running lead managers, may consider a further issue of specified securities aggregating up to Rs 177 crore. If such placement is completed, the fresh issue size will be reduced.
The offer is being made through the book-building process, wherein at least 75% of the offer shall be available for allocation on a proportionate basis to qualified institutional buyers, not more than 15% of the offer shall be available for allocation to non-institutional bidders, and not more than 10% of the offer shall be available for allocation to retail individual investors.
Aye Finance, a leading Non-Banking Financial Company (NBFC), provides business loans to the largely underserved micro-scale enterprises in India. The NBFC focuses on a huge total addressable market of 63 million micro MSMEs with an unaddressed credit gap of ₹53 trillion as the industry faces a critical challenge with limited access to formal credit.
Aye Finance serves over 5 lakh unique active customers through its extensive network of 478 branches spanning 18 states and 3 Union Territories. This impressive scale is complemented by Aye’s stellar growth: as of September 30, 2024, the company’s Assets Under Management (AUM) stood at Rs4,980 crore, making it the fastest-growing NBFC in India with a 64% year-on-year AUM growth in Fiscal 2024 over Fiscal 2023.
Aye’s is the most geographically diversified NBFC focused on MSMEs, with branches spread across all four regions—North, South, East, and West. Importantly, no single state accounts for more than 15% of its portfolio, and the top three states together contribute to less than 40% of the total AUM as of March 2024.
Aye Finance caters specifically to the unique needs of micro-enterprises through small-ticket business loans with an average disbursement size of Rs0.15 million. Few other players in the MSME lending space offer such a comprehensive suite of products—ranging from secured loans against property and working assets to unsecured business loans.
At the heart of Aye’s success is its deep expertise in underwriting business cash flows for diverse business clusters. This capability has been a critical advantage, enabling the company to maintain stable credit costs while profitably scaling its operations. Supporting this is Aye’s innovative ‘phygital’ business model, which seamlessly blends the strengths of digital technology with physical outreach. This unique approach not only enhances operational efficiencies but also ensures a cost-effective, seamless experience for its customers.
Aye Finance’s focus on technology and operational excellence has delivered impressive results. Between Fiscal 2022 and H1Fiscal 2025, the company achieved the sharpest reduction in cost-to-income ratio among its peers, improving by 32%. Additionally, it recorded the fastest AUM growth per employee, with a CAGR of 33.2% during this period. By disbursing 45 loans per employee as of Fiscal 2024, Aye has demonstrated exceptional efficiency in small-ticket lending. The company also achieved remarkable growth in disbursement per branch and disbursement per employee, which expanded at a CAGR of 40.2% and 44.2%, respectively.
Axis Capital Limited, IIFL Capital Services Limited, JM Financial Limited, and Nuvama Wealth Management Limited are the book-running lead managers, and KFin Technologies Limited is the registrar of the issue.
