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We Plan To Further Strengthen Our Position In Education Financing Industry: Amit Gainda, CEO, Avanse Financial Services

In an interview with BW Businessworld, Amit Gainda, CEO, Avanse Financial Services, talks about business goals, products, e-learning and more

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What led to the founding of Avanse? What problem is the business trying to solve?

Established in 2013, Avanse Financial Services was born out of a need to empower the youth of the country to pursue higher education in India and abroad.   

We are on a mission today to make ‘education lending accessible and affordable for every deserving Indian student.’ 

Avanse is committed to providing customized financing solutions that cover every aspect in the education eco-system. A varied product portfolio which covers

* Education Loans 

-Education Loans for higher education in India or Abroad
-Loan for Skill Enhancement Courses
-School Fee Financing
-Education Loan for e-learning courses

Our lending solutions cover the entire student cycle from KG to PG. 

* Education Institution Loans – growth and working capital requirements for K-12 schools. 

With our customised solutions, we intend to continue with our efforts to disrupt the market by sticking to our fundamental strategy of being highly customer-centric and digitally agile. 

How do you differentiate your offering? Tell us a bit about your product basket, across EL, EIL and E-Learning.

Avanse takes a holistic student-centric approach to support a student’s desire for higher education. We look at student’s past academics, the program that the student wishes to pursue, the institute where he/she has been admitted and its placement record and the future employability potential of the student. 

Avanse has created customized solutions for students based on the country and programs the student is keen to pursue. Avanse has taken the lead to fund unconventional programs as well. The interest rates offered by all institutions differ at some level depending on the type of course, placements, future employability, security offered and other factors. 

Many of the banks and other financial institutions offer an education loan that only covers tuition fees. However, Avanse provides finance covering the complete cost of education including living and other expenses, exam and library fees, books and equipment (computer) and/or travelling expenses without putting a cap on the amount that can be borrowed.  

The loan sanctioning process at Avanse is extremely student-friendly. Avanse has built a digital prowess and a seamless framework, primarily led by technological services and comprehensive data analytics which enables us to offer the best in class TAT of fewer than 5 days for higher education segment and for e-learning segment the sanctioning is within 10 minutes.

Additionally, we have dedicated teams who meet students & their parents and assist them right from the stage of applying for a program of their choice to the loan disbursement and thereafter providing other value-added services/ solutions they may need while they set off to pursue their education abroad.

Our company has multiple verticals and businesses that we have forayed into with solutions for every segment of the Indian Education sector, from primary school to college and to higher/executive education. We also contribute towards building adequate and advance education infrastructure in the country. 

With the vision of making education financing seamless and affordable for every deserving Indian student, we have fulfilled education dreams of over 60,000 academic aspirants across 7000 courses in over 2,000 institutes across 45 countries. Additionally, we have also provided growth and working capital to ~400 educational institutes catering to over 6-7 lakh students.

You were recently acquired by Warburg Pincus. Tell us a bit about this move. How do you intend to deploy this capital and why?

Avanse was acquired by Warburg Pincus, a leading global Private Equity firm focused on growth investments that have more than $65 billion in private equity assets under management. The firm’s active portfolio of more than 185 companies is highly diversified by stage, sector and geography. Warburg acquired the controlling equity stake (80%) in Avanse. IFC, an arm of World Bank continues to hold 20% equity stake. Both the investors infused fresh capital of Rs 300 crore. With our shareholder’s strong pedigree, proven track record, patient capital and partnership approach, we further intend to strengthen our position in the education financing space enabling us to deliver a better value proposition to our customers.  We are on a journey to create a legacy with a vision to create customer-centric Digitally Agile NBFC focused on sustained Profitable Growth delivering superior returns to all the stakeholders 

Are you a profitable company? Tell us a bit about your numbers for FY ’20, so far. 

Yes, we are a profitable company.  Over a two-period from FY17 till the end of FY 19 (March 31, 2019), Avanse has registered a grown by   ~3x in AUM and 8.5x growth in profitability. As of half-yearly closing September 2019 our AUM is at ~2800 Cr. We expect to grow by ~10% in FY20, where-as we expect to grow by 15-20% in the long term and build Rs. 8000 Cr. ~ Rs 10,000 cr. AUM by FY 2024-25. 

How do you manage credit risks within your portfolio? How have you fared on that front so far, vis-a-vis the competition? Do you use any special tools for underwriting? 

Managing credit risks and onboarding right profile is crucial for our long-term success. Our unique student-centric underwriting approach gives us an edge over our competition.  With the help of advanced analytics coupled with non- traditional sources of data, this model evaluates each student on multiple variables that helps us to get a better perspective of evaluating our credit risks. We conduct a detailed evaluation of student’s employability potential basis students past academics, institute and course pedigree, country of study and many other variables. We also run a thorough credit check on the student and the co-borrowers profile prior to the loan approval process. Since an Education loan is generally the first loan taken in their lifetime, Avanse also takes concrete steps towards educating the students on the importance of maintaining a good CIBIL score by timely repayment of loans. Avanse also highlights the long term repercussions on defaulting on the loans.

As per bureau reports, in the 10 Lac+ loan size segment, the industry level NPA is 0.96%, Avanse operates over 90% of its Education Loan business in this segment with significantly lower NPA in comparison with the industry  

Lastly, do tell us about some of your business goals for the next fiscal year.

For the next FY, we plan to further strengthen our position in the education financing industry with focus on responsible lending and sustained profitability. We will continue to become more relevant in the education ecosystem by widening our distribution, partnerships and product portfolio.   In the medium to long term we expect to grow by 15-20% year on year and build Rs. 8000 Cr. ~ Rs 10,000 cr. AUM by FY 2024-25

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