Avaas Financiers LTD.

Aavas Financiers Ltd. (Formerly known as 'Au Housing Finance Limited') was incorporated on 30
November 2017 to carry on the business of financing by way of lending/hire-purchase and to
provide on lease sub-lease or on hire including but not limited to all type of vehicles automobiles
industrial plant and machinery office equipment movable and immovable assets building real
estate household and domestic appliances and equipment furniture fixtures finishing items and
all type of machinery etc. The Company is a retail affordable housing finance company primarily
serving low and middle income self employed customers in semi-urban and rural areas in India.
A majority of its customers have limited access to formal banking credit.The Company offers
customers home loans for the purchase or construction of residential properties and for the
extension and repair of existing housing units. In addition to home loans the company offers
customers other mortgage loans including loans against property. Since the commencement of
operations in March 2012 the company has served more than 62500 customers.Aavas Financiers
has adopted a strategy of contiguous on-ground expansion across regions and at present the
company conducted its operations through 166 branches covering 95 districts in eight states of
which it has a significant presence in the four States of Rajasthan Gujarat Maharashtra and
Madhya Pradesh. The Company is a technology driven company and it leverages information
technology and data analytics for on boarding customers underwriting analysis loan monitoring
and risk management and collection functions. Between Fiscals 2014 and 2018 the company
invested Rs 150.45 million in information technology systems.The Company secures financing
from a variety of sources including term loans and working capital facilities; proceeds from loans
assigned and securitized; proceeds from the issuance of non-convertible debentures ('NCDs');
refinancing from the National Housing Bank ('NHB'); and subordinated debt borrowings from
banks mutual funds insurance companies and other domestic foreign and multi-lateral financial
institutions to meet its capital requirements. The Company is led by a professional management
team and its Key Managerial Personnel held 7.19% of the outstanding equity interest of the
Company.The Company was initially promoted by Au Financiers (India) Limited (now known as
AU Small Finance Bank Limited ('AuSFB') which sold 90.10% of the outstanding equity interest of
the Company in connection with its conversion to a small finance bank to Lake District Holdings
Limited (a subsidiary of Kedaara Capital I Limited) ('Lake District') Kedaara Capital Alternative
Investment Fund - Kedaara Capital AIF 1 ('Kedaara AIF-1') Partners Group ESCL Limited ('ESCL')
and Partners Group Private Equity Master Fund LLC ('Master Fund') in June 2016. Aavas
Financiers Limited was incorporated as private limited company with the name Au Housing
Finance Private Limited' on February 23 2011. During the year under review the company was
registered with National Housing Bank (NHB) as a housing finance institution without accepting
public deposits'. In 2012 the company received its first rating 'BBB+/Stable' from CRISIL for
long-term bank facilities of Rs 1000 million.Pursuant to a special resolution passed by the
shareholders on January 10 2013 the company was converted into a public limited company and
the name was changed to AU Housing Finance Limited' on January 11 2013. Consequent to the
conversion of into a public limited company the NHB issued a fresh certificate of registration to
the company. In 2013 the company received its first refinancing assistance from NHB. In 2014
the company issued its first tranche of non-convertible debentures (NCDs). In 2015 the company
entered into its first pool buyout transaction in housing loan priority sector. Pursuant to a
notification dated December 18 2015 issued by the Central Government the Company was
identified as a financial institution' under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act 2002.In 2016 the company received investment
from Lake District Kedaara AIF-1 Master Fund and ESCL. During the year under review the
company received its first subsidy from NHB under CLSS-PMAY'Pursuant to a special resolution
passed by the shareholders on February 23 2017 the name of the Company was changed to
Aavas Financiers Limited' on March 29 2017. Subsequently upon the change of name to Aavas

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Financiers Limited' the NHB issued a certificate of registration dated April 19 2017 bearing serial
number 04.0151.17. Pursuant to a certificate of registration dated December 8 2017 issued to
the Company by the IRDAI it has been authorised to act as a corporate agent (composite) under
the Insurance Act and the Corporate Agents Regulation 2015.In 2017 Aavas Financiers Limited
entered into first pass through certificate (PTC) transaction with IDBI Trusteeship Services
Limited.Aavas Financiers Limited came out with an initial public offer (IPO) during the period
from 25 September 2018 to 27 September 2018. The IPO was a combination of fresh issue of Rs
400 crore and an offer for sale of upto 1.62 crores equity shares from 6 selling shareholders. The
IPO was priced at Rs 821 per share. The stock made its debut on the bourses on 8 October
2018.During the year 2018 the Company has issued and allotted 432500 two thousand five
Equity Shares of Rs 10/- per share aggregating to Rs 28372000/- on preferential issue basis.
Further the Company has received Rs 2/- per share as application money.During the Year 2018
the Company has received Rs 2/- per share aggregating to Rs 31000047/- as 1st call Money in
respect to the 720094 partly paid up equity shares of Rs 10/- each.During the year 2018 the
Company has issued and allotted 360000 and 440000 Lakh share warrants convertible into
equity shares of Rs 328/-and Rs 430.50/- per share respectively. Further the Company has
received Rs 3/- per convertible share warrants as warrant subscription money.During the year
2018 the Company has altered its Object Clause of Memorandum of Association (MOA) as per
the suggestions given by the National Housing Bank during its onsite Annual inspection. Further
the altered MOA is available at the registered office of the Company in the Business hours.During
the year the Company expanded its branch network to 165 branches as of 31st March 2018 and
plans to scale up its operation to newer geographies in 2018-19.

Aavas Financiers Products

They venture in loan offerings on properties & home building like:-

1. Home Loan
2. Land Purchase + Construction
3. Home Improvement Loan
4. Home Loan Balance Transfer
5. Loan Against Property
6. MSME Loan

Aavas Financiers Strengths:-

 Strong Distribution Network with Deep Penetration Serving Underserved

Customers in Rural and Semi-Urban Markets.

 In-house Sourcing Model leading to Superior Business Outcomes.

 Robust and Comprehensive Credit Assessment, Risk Management and

Collections Framework.

 Access to Diversified and Cost-Effective Long-Term Financing.

 Effective Use of Technology and Analytics to build a Scalable and Efficient

Operating Model

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Promoters

As on the date of this Draft Red Herring Prospectus, Lake District and ESCL are the
Promoters of our Company. Lake District and ESCL currently hold 35,261,756 Equity Shares,
equivalent to 49.84% and 17,127,627 Equity Shares equivalent to 24.21% of the pre-Offer
issued, subscribed and paid-up Equity Share capital of our Company, respectively.

Financials

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Pre IPO Analysis
Objects of the Issue

Offer for Sale Each of the Selling Shareholders will be entitled to its respective proportion of
the proceeds of the Offer for Sale after deducting their portion of the Offer related
expenses and relevant taxes thereon.

The company plans to raise Rs 1,734 crore during the three-day

IPO. During this period, the original investors will look to sell a
part of their stake and the company will look to enhance its
capital.
The price band for the public issue is between Rs 818-821. The
company will look to issue fresh shares worth Rs 400 crore.
Lake District Holdings, Partners Group Private Equity Master Fund
and Partners Group ESCL will look to sell their 24.2% stake in the
company. These entities were the promoters of Aavas Financiers.
Kedara Capital, which has the highest shareholding in the
company, will look to sell 0.32% of their holding. The total number
of shares that will be sold by them is around 1.62 crore

Fresh Issue

(a) Gross Proceeds

(b) Less: Offer related expenses to the extent borne by our Company

(c) Net proceeds of the Fresh Issue

Offer Available to be Purchased

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Aavas Financiers IPO Lead Managers

Aaavas Financiers IPO Details

IPO Particulars IPO Details

Issue Open date 25 Sep 2018 - 27 Sep 2018
Issue Type Book Built Issue IPO
Issue Size 21121437 equity share of Rs. 10 (plans to raise Rs 1,734 crore)
Face Value Rs. 10 per equity share
Issue Price Rs. 818 - Rs. 821 per equity share
Market Lot 18 Shares
Minimum Order 18 Shares
Fresh Issue Rs. 400 Crore
Listing at BSE, NSE

Capital Structure

Issue Analysis
IPO Time Table

The Aavas Financiers IPO open date is Sep 25, 2018, and the close date is Sep 27,
2018. The issue may list on Oct 8, 2018.

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IPO Subsciption Status

Shares Offered

Subscription Details (Day by Day)

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Post Issue Analysis

The initial public offering (IPO) of Aavas Financiers Ltd scraped through on Thursday but
failed to get full subscription as concerns related to non-banking financial companies
(NBFCs) continued to hurt market sentiment.
The IPO of 14.78 million shares, excluding the anchor allotment, received bids for 14.36
million shares at the end of the final day of the issue. That amounts to a subscription of nearly
97%, stock-exchange data showed.
Market sentiment has weakened in recent weeks amid fears that NBFCs and housing finance
companies are facing a cash crunch. The concerns have risen after Infrastructure Leasing &
Financial Services (IL&FS) defaulted on its debt this month, sparking a sell-off in shares of
NBFCs and mortgage lenders.
The BSE’s benchmark Sensex has fallen 7% since the record highs of 38,989.65 on 29
August. The mid- and small-cap indices have fallen 11% and 13% since then, stock-exchange
data showed.
The Aavas IPO is third PE-backed offering in the recent past that has received tepid response
from retail investors and wealthy investors against a backdrop of volatile market sentiment
and frothy valuations.
Stock-exchange data showed that institutional buyers bid for nearly three times the shares
reserved for them in the Aavas IPO while the portion set aside for retail investors was
covered 24%.
Non-institutional investors—which include corporate bodies and wealthy individuals—used
up 26% of their quota, as margin funding appeared unfavourable given the weak undertone in
secondary markets.
The IPO had made a slow start on the first day on Tuesday, getting subscribed 4.4%. It was
subscribed 29% on the second day on Wednesday.

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