Shardul Amarchand Mangaldas advises Aavas Financiers Limited in raising funds through an initial public offering

October 9, 2018

Shardul Amarchand Mangaldas has advised private-equity backed housing finance company Aavas Financiers Limited (the “Company”) in relation to an initial public offering aggregating to ₹ 1,734 crore, listed on the Indian stock exchanges on 8 October 2018 at Rs. 758 per share.

 

Aavas mainly offers low-ticket, high-yield home loans to low-income rural and semi-urban self-employed borrowers in India. Previously known as Au Housing Finance Limited, Aavas began operations in 2012 as the erstwhile subsidiary of Jaipur-based Au Small Finance Bank Limited. Now promoted by Swiss-based Partners Group and home-grown private equity player Kedaara Capital, Aavas is registered with the National Housing Bank as a housing finance company, operating through a network of 165 branches covering 95 districts across 8 states: Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Haryana, Delhi, Uttar Pradesh and Chhattisgarh. Rajasthan contributes 47 percent of its loan book.

 

This is the first completed Indian IPO where only private equity investors, and no other individuals or entities, were identified as the promoters of the Company.

 

The issue included a fresh issue component of approximately ₹ 400 crore, for infusion of capital into the Company’s lending business, as well as an offer for sale by Promoter Selling Shareholders, Lake District Holdings Limited (promoted by Kedaara Capital I Limited) and Partners Group ESCL Limited, Promoter Group Selling Shareholder, Partners Group Private Equity Master Fund LLC, and Investor Selling Shareholder, Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1. CEO Sushil Kumar Agarwal and Non-Executive Director Vivek Vig also participated in the issue as individual selling shareholders.

 

The issue included an anchor component of approximately ₹ 520 crores, raised from 34 marquee foreign and domestic anchor investors such as Abu Dhabi Investment Authority, Bajaj Life, Birla Sunlife, BNP, Buena Vista, DSP Blackrock Tax Saver Fund, Edelweiss MF, HSBC Halbis, ICICI Prudential, IDFC MF, IIFL MF, Kotak MF and Life, Kuwait Investment Authority, Max Life, Morgan Stanley India Investment, PremjiInvest, Nomura, Reliance MF, SBI MF and Life, Sundaram MF, Think, and Wasatch, amongst others. The issue was successfully completed in a volatile market, with the qualified institutional buyer (QIB) book subscribed 2.8 times. The issue closed within approximately three and a half months from the filing of the Draft Red Herring Prospectus with the Securities and Exchange Board of India on 20 June 2018.

 

Other transaction parties included ICICI Securities Limited, Citigroup Global Markets India Private Limited, Edelweiss Financial Services Limited and Spark Capital Advisors (India) Private Limited as the Global Book Running Lead Managers (“GCBRLMs”) and HDFC Bank Limited as the Book Running Lead Managers (“BRLM”).

 

The transaction team from SAM & Co included Mr. Prashant Gupta, Partner and NP Head – Capital Markets; Ms. Monal Mukherjee, Partner; Mr. Siddhartha Desai, Senior Associate; Ms. Trishita Dasgupta, Associate; Ms. Oindree Bandyopadhyay, Associate and Mr. Sanjeev Chowdhary, Associate.

 

Other advisors to the transaction included Sidley Austin LLP acted as legal counsel to the GCBRLMs and BRLM as to international law, L&L Partners acted as legal counsel to the Promoter Selling Shareholders, Investor Selling Shareholder and Promoter Group Selling Shareholder as to Indian law, and Cyril Amarchand Mangaldas acted as legal counsel to the GCBRLMs and BRLM as to Indian law.