Aye Finance, the firm backed by Google parent Alphabet, a Gurugram based non-banking financial company (NBFC), has filed its draft red herring prospectus (DRHP) with SEBI to raise ₹1,450 crore through an initial public offering (IPO). Focused on serving micro, small, and medium enterprises (MSMEs), the company aims to capitalize on the increasing credit demand in this underserved segment.
The IPO will include a fresh issue of equity shares worth ₹885 crore and an offer for sale (OFS) of ₹565 crore by existing investors. Key participants in the OFS include prominent investors like LGT Capital, CapitalG LP, A91 Emerging Fund I LLP, and Alpha Wave Ventures.
Aye Finance has showcased stellar financial performance, with its profit after tax (PAT) surging by 291.5% to ₹171.7 crore in FY24, up from ₹43.9 crore in FY23. The NBFC also boasts a robust operational framework, with a net non-performing asset (NPA) ratio of 0.9% and a provision coverage ratio (PCR) of 72%, ranking among the best in the sector.
With a return on equity (ROE) of 17.2% and a healthy debt-to-equity ratio of 2.8, Aye Finance has solidified its position as a key player in MSME lending. Its assets under management (AUM) reached ₹4,980 crore as of September 30, 2024, reflecting an impressive 64% year-on-year growth.
The fresh issue proceeds will be used to strengthen the company’s capital base to support future expansion, asset growth, and other corporate initiatives.
Aye Finance operates in a vast market of 63 million MSMEs, which face an estimated ₹53 trillion credit gap. The company currently serves over 5 lakh active customers through a wide network of 478 branches across 18 states and 3 Union Territories. Its diversified portfolio ensures that no single state contributes more than 15% to its total AUM.
Additionally, Aye Finance has announced a potential pre-IPO placement of up to ₹177 crore. If this materializes, the fresh issue size will be adjusted accordingly.
