By Mr. Abhay Ray 
Introduction
Aye Finance, a leading financial services provider catering to small and medium-sized enterprises (SMEs), has received regulatory approval for its initial public offering (IPO) from the Securities and Exchange Board of India (SEBI). The approval paves the way for the company to raise capital from public investors and lists its shares on the Indian stock exchanges. Aye Finance’s IPO is expected to generate significant interest, given its focus on providing micro-loans to underserved businesses across India. The funds raised through the offering are likely to support the company’s expansion and its continued efforts to empower SMEs with accessible financial solutions.
About ‘Aye Finance’
Aye Finance (AyeFin), a non-banking financial company (NBFC) established in 2014, focuses on providing business loans to micro and small enterprises (MSMEs) in India, particularly in semi-urban areas, with a cluster-based lending approach.
Our Mission to provide innovative and customer centered financial services to micro and small businesses through knowledgeable team, effective technology and robust processes to power their growth into the new-age India.
Aye Finance IPO details
Located in Gurugram, Aye Finance Limited is a non-banking financial company middle layer (NBFC-ML) that focuses on extending loans to micro-scale micro, small, and medium enterprises (MSMEs) throughout India, aiming to raise ₹1,450 crore through its IPO.
The IPO, featuring a face value of ₹2 per equity share, consists of a fresh issue up to ₹885 crore and an offer for sale up to ₹565 crore by both corporate and individual selling shareholders. The company submitted its IPO documents to SEBI on December 16, 2024.
The book-running lead managers for this offering include Axis Capital Limited, IIFL Capital Services Limited, JM Financial Limited, and Nuvama Wealth Management Limited, while KFin Technologies Limited serves as the registrar for the offering.
Aye Finance IPO : Equity Sale and Fresh Issue to Boost Capital Base
The offer for sale consists of the sale of equity shares up to ₹150 crore by LGT Capital Invest Mauritius PCC with Cell E/VP, up to ₹130 crore by Capital GLP, 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 VikramJetley.
The proceeds from its fresh issuance will be utilised 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 ₹177 crore. If such placement is completed, the fresh issue size will be reduced.
Strong FY24 Growth & Low NPAs
The company posted strong operational performance, as of financial year 2024, it has one of the lowest Net NPAs among peer NBFCs, at 0.9%, alongside the highest provision coverage ratio of 72%.
Aye Finance’s profit climbed 291.5% from ₹43.9 crore in FY23 to ₹171.7 crore in FY24. 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 NBFC provides small-ticket business loans with an average ticket size on disbursement of ₹1.50 lakh to micro enterprises. It is the most geographically diversified lender amongst the Peer MSME Focused NBFCs, according to a CRISIL Report.
Conclusion
The SEBI approval for Aye Finance’s IPO marks a pivotal moment in the company’s growth journey. With a robust financial track record, including significant profit growth and strong operational metrics, Aye Finance is well-positioned to attract investor interest. The IPO will raise capital through an offer for sale and fresh issuance, with proceeds aimed at strengthening the company’s capital base and supporting its expansion plans.
Aye Finance’s focus on providing micro-loans to small and medium-sized enterprises (SMEs) in India, combined with its low NPAs and high provision coverage ratio, positions it as a key player in the MSME lending sector. As the company moves towards its market debut, it offers investors an opportunity to participate in its continued growth and success.with a clear path to growth and the backing of experienced book-running lead managers, Aye Finance’s IPO is poised to generate strong interest and contribute significantly to its mission of empowering India’s underserved businesses.
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