Gurugram-based Aye Finance Ltd, a prominent non-banking financial company (NBFC) serving micro and small businesses across India, has secured the green light from the Securities and Exchange Board of India (SEBI) to float its initial public offering (IPO).

IPO Structure and Size

The IPO aims to raise ₹1,450 crore, which includes a fresh issue of equity shares worth up to ₹885 crore and an offer for sale (OFS) of up to ₹565 crore by existing shareholders.

The face value of the equity shares is ₹2 per share. Notably, the IPO also provides flexibility, as Aye Finance may explore a pre-IPO placement of up to ₹177 crore. Should this occur, the size of the fresh issue would be adjusted accordingly.

Offer for Sale Breakdown

The offer for sale includes equity shares sold by both institutional and individual investors:

• LGT Capital Invest Mauritius PCC with Cell E/VP – up to ₹150 crore

• CapitalG LP – up to ₹130 crore

• A91 Emerging Fund I LLP – up to ₹100 crore

• Alpha Wave India I LP – up to ₹100 crore

• MAJ Invest Financial Inclusion Fund II K/S – up to ₹56.04 crore

• CapitalG International LLC – up to ₹6.8 crore

• Harleen Kaur Jetley – up to ₹14.5 crore

• Vikram Jetley – up to ₹7.66 crore

This diverse base of sellers reflects the broad institutional confidence in Aye Finance’s growth trajectory and business fundamentals.

Use of IPO Proceeds

The net proceeds from the fresh issue will be primarily used to:

• Augment the capital base of the company

• Meet future capital requirements due to expansion in lending and operations

• Support general corporate purposes

This infusion will enable Aye Finance to broaden its MSME lending portfolio, strengthen risk buffers, and further build operational capabilities across India.

Strong Financials Backing the IPO

Robust FY24 Performance

In FY24, Aye Finance demonstrated strong financial and operational metrics, setting a solid foundation for its public offering:

• Net Profit jumped from ₹43.9 crore in FY23 to ₹171.7 crore, marking a massive 291.5% growth

• Return on Equity (ROE) stood at 17.2%, indicating efficient capital usage

• Debt-to-Equity Ratio was 2.8, reflecting prudent financial management

• Maintained Net NPA at just 0.9%, among the lowest in peer NBFCs

• Reported a Provision Coverage Ratio of 72%, the highest among its peers, indicating strong provisioning discipline

These metrics showcase Aye Finance's focus on risk-managed lending, robust underwriting, and effective credit monitoring.

Business Focus: Micro and Small Enterprises

Aye Finance provides small-ticket business loans to micro enterprises. The average disbursement ticket size is approximately ₹1.5 lakh, aimed at supporting small entrepreneurs and underserved businesses across the country.

According to a CRISIL report, Aye Finance is the most geographically diversified lender among peer MSME-focused NBFCs, giving it a competitive edge in market penetration and risk diversification.

IPO Management and Listing Details

The issue is being managed by a consortium of top-tier book-running lead managers, including:

• Axis Capital

• IIFL Capital Services

• JM Financial

• Nuvama Wealth Management

The registrar of the issue is KFin Technologies, which will handle the IPO allotment and investor services.

Market Outlook and Growth Potential

With India’s MSME sector poised for rapid growth, companies like Aye Finance are expected to play a pivotal role in bridging the credit gap for underserved businesses. The sector contributes significantly to GDP and employment, yet lacks adequate formal credit access.

Aye Finance’s tech-driven lending model, deep market reach, and data-backed underwriting position it well to scale further in the coming years. This IPO offers retail and institutional investors a chance to tap into this expanding space.

Final Thoughts

The IPO of Aye Finance reflects a strong vote of confidence in the NBFC’s financial health, growth prospects, and commitment to financial inclusion. With SEBI’s approval, the stage is now set for one of the most promising public issues in the Indian financial services space in 2025.

As the company moves ahead with its listing plans, investor attention will now shift towards the price band, subscription window, and listing dates, which are expected to be announced shortly.

The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

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