Warburg Pincus to buy India education finance business
Warburg Pincus has agreed to acquire an 80% stake in Avanse Financial Services, an India-based non-banking finance company (NBFC) focused on education.
The purchase includes a 50% stake in Avanse held by multinational conglomerate Wadhawan Global Capital (WGC) along with a 30% holding from Dewan Housing Finance (DHFL), an Indian mortgage lender owned by WGC. Financial terms of the purchase have not been disclosed, but Indian media outlets have reported that the deal values Avanse at INR11 billion ($160 million).
The International Finance Corporation (IFC), which holds a 20% stake in Avanse, will retain its holding following the purchase, according to a statement. In addition to acquiring WGC and DHFL’s stakes, Warburg Pincus also plans to commit INR3 billion in primary equity capital to Avanse to fund its future growth.
Avanse was launched in 2013 to provide loans for Indian students to pursue higher education worldwide. It claims to have provided funding to over 15,000 students at more than 2,000 schools in 46 countries, including India. The company currently has assets under management of more than INR29 billion.
Along with its primary education loan business, Avanse also provides financial products to educational institutions for working and growth capital needs, mainly at K-12 levels. Initiatives for personal loans and micro, small, and medium-sized enterprise (MSME) financing are currently under development.
The Avanse sale follows the divestment of another WGC subsidiary, affordable housing lender Aadhar Housing Finance, to the Blackstone Group last month. The transactions come as DHFL and WGC continue to struggle with accusations that the Wadhawan family that controls WGC used DHFL to illegally divert INR310 billion of public funds to acquire assets overseas.
DHFL’s stock price plunged as low as INR104.85 following the publication of the allegations by an investigative news portal in early February and has recovered only slightly since, closing at INR135.90 on March 18. DHFL stock was trading around INR611 in mid-September but, along with other non-bank lenders, suffered from a crisis in investor confidence following a string of defaults by Infrastructure Leasing & Financial Services and the lender’s subsequent bankruptcy.
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