Aye Finance IPO Set to Launch Next Week, Reviving Primary Market Activity
The initial public offering (IPO) of Aye Finance is scheduled to commence next week, marking a resurgence in primary market action following a brief period of inactivity. This non-banking finance company (NBFC), which specializes in providing loans to micro-scale MSMEs across India, announced the price band for its upcoming share sale earlier this week. The shares are priced between ₹122 and ₹129 each, setting the stage for a significant financial event.
Understanding Aye Finance's Business Model
Aye Finance operates as a middle-layer NBFC, with a core focus on offering small-ticket business loans to micro, small, and medium enterprises (MSMEs). These loans are designed to support working capital needs and business expansion initiatives. The company serves customers across diverse sectors, including manufacturing, trading, services, and allied agriculture. With an average ticket size tailored to the needs of small businesses, Aye Finance plays a crucial role in fostering economic growth at the grassroots level.
10 Essential Details About the Aye Finance IPO
As investors prepare for the IPO launch, here are ten critical points to consider:
- IPO Dates: The Aye Finance IPO will open on February 9 and close on February 11. The anchor book opened on February 6, with allotment expected to be finalized on February 12. Listing on both the BSE and NSE is anticipated on February 16.
- IPO Size: The offer comprises a fresh share sale of ₹710 crore and an offer for sale of up to ₹300 crore. At the upper end of the price band, the company aims to raise a total of ₹1010 crore.
- Selling Shareholders: Key selling shareholders include Alpha Wave India, MAJ Invest Financial Inclusion Fund, LGT Capital, Capita G LP, and Vikram Jetley, who are looking to offload their stakes.
- IPO Objective: The net proceeds from the fresh share sale will be utilized to strengthen the company's capital base, supporting future requirements for business expansion and asset growth.
- Lot Size: Retail investors can apply in lots of 116 shares, with a minimum investment of ₹14,964 at the upper price band.
- IPO Allocation: The allocation breakdown includes 75% for Qualified Institutional Buyers (QIBs), 15% for non-institutional investors (NIIs), and 10% for retail investors.
- Grey Market Premium (GMP): The GMP for Aye Finance IPO has experienced a notable decline, dropping from ₹5 to ₹1. This indicates that shares are currently trading at ₹130 in the grey market.
- Listed Peers: According to the red herring prospectus (RHP), SBFC Finance and Five-Star Business Finance are identified as listed peers of Aye Finance.
- Financial Performance: For Fiscal Year 2025, Aye Finance reported a profit of ₹175.3 crore, slightly up from ₹171.7 crore in the previous year. Net interest income (NII) saw a significant increase of 37.9%, rising to ₹858 crore from ₹622.2 crore year-over-year.
- Book-Running Lead Managers: The IPO is managed by Axis Capital, IIFL Capital, JM Financial, and Nuvama Wealth Management, with KFin Technologies serving as the registrar.
Investment Considerations and Market Context
The launch of Aye Finance's IPO comes at a time when many non-bank peers are opting to wait, highlighting the company's confidence in market conditions. As a player in the MSME lending space, Aye Finance's performance will be closely watched by investors seeking exposure to India's growing small business sector. The allocation strategy, with a majority reserved for institutional buyers, reflects typical market practices aimed at ensuring stability and broad participation.
Disclaimer: This article is intended for educational purposes only. Investors are advised to consult with certified financial experts before making any investment decisions.
