Aye Finance IPO Subscription Window Set for February 9-11; Anchor Allocation on February 6
The much-anticipated initial public offering (IPO) of Aye Finance, a prominent non-banking financial company (NBFC) focused on micro, small, and medium enterprises (MSMEs), is scheduled to open for subscription on Monday, February 9, and will close on Wednesday, February 11. Prior to this, the allocation for anchor investors is expected to take place on Friday, February 6, setting the stage for the public issue.
IPO Pricing and Valuation Details
The company has established a price band of ₹122 to ₹129 per equity share, with each share having a face value of ₹2. This pricing strategy places the total valuation of Aye Finance at approximately ₹3,184 crore at the upper end of the band. The IPO itself is a ₹1,010 crore offering, comprising a fresh equity issue worth ₹710 crore and an offer for sale (OFS) of shares valued at ₹300 crore by existing shareholders.
Grey Market Premium and Estimated Listing Price
In the unofficial grey market, Aye Finance IPO shares are currently commanding a premium of ₹5, known as the grey market premium (GMP). Based on this premium and the upper price band of ₹129, market observers estimate the listing price could be around ₹134 per share. This represents a potential gain of 3.88% over the IPO price, offering an attractive entry point for investors seeking exposure to the MSME lending sector.
Offer Structure and Key Investors
The public issue has been structured to allocate not less than 75% of the shares to qualified institutional buyers (QIBs), not more than 15% to non-institutional investors (NIIs), and not more than 10% to retail investors. Among the notable existing shareholders participating in the OFS are Alpha Wave India, MAJ Invest Financial Inclusion Fund, CapitalG (a part of Alphabet), LGT Capital, and Vikram Jetley. Major pre-IPO stakeholders include Elevation Capital (16.03%), LGT Capital (13.99%), Alphabet via CapitalG (13.14%), and Alpha Wave India (11.1%).
Utilization of Proceeds and Lead Managers
Aye Finance plans to utilize the net proceeds from the fresh issue to meet its future capital requirements arising from business expansion and asset growth. The IPO is being managed by a consortium of lead managers, including Axis Capital, IIFL Capital Services, JM Financial, and Nuvama Wealth Management, with Kfin Technologies Ltd. serving as the registrar for the offering.
Tentative Timeline for Allotment and Listing
The basis of allotment for the Aye Finance IPO is tentatively set to be finalized on Thursday, February 12. Subsequently, refunds will be initiated on Friday, February 13, with shares credited to the demat accounts of successful allottees on the same day. The equity shares of Aye Finance are expected to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Monday, February 16.
Business Overview and Market Position
Aye Finance operates as an NBFC-Middle Layer (NBFC-ML), specializing in providing loans to micro-scale MSMEs across India. The company offers a diverse range of business loans for working capital and expansion needs, secured by hypothecation of assets or property. It caters to customers in sectors such as manufacturing, trading, services, and allied agriculture.
With a customer base of 586,825 active unique clients spread across 18 states and 3 union territories, and assets under management (AUM) of ₹60,276.22 million as of September 30, 2025, Aye Finance ranks among the top NBFCs serving the often-overlooked micro-enterprise segment in India.
Target Customer Segment and Industry Context
The company primarily targets micro-enterprise owners in urban and semi-urban areas, especially those involved in cash-and-carry operations. Many of these customers, despite running businesses for over five years, lack formal documentation such as income proof, GST registration, or bank statements. This underscores the unique underwriting capabilities Aye Finance has developed to serve this niche.
The MSME sector in India faces a substantial credit gap, estimated at ₹103 trillion as of fiscal 2025. Micro-enterprises constitute 98% of this sector, with a total potential credit demand of around ₹76 trillion. Formal financing currently meets approximately ₹42 trillion, leaving a gap of about ₹34 trillion. NBFCs like Aye Finance have been increasing their market share in this space, growing from 9.2% in fiscal 2019 to 16.6% in fiscal 2025, according to CRISIL reports.
Financial Performance and Key Metrics
For the fiscal year ending March 2025, Aye Finance reported a profit of ₹175.3 crore, a slight increase from ₹171.7 crore in the previous year. The company's net interest income saw robust growth, surging by 37.9% to ₹858 crore from ₹622.2 crore. By September 2025, it serviced 5.86 lakh active customers and managed AUM of ₹6,027.6 crore.
Key Risks and Investor Considerations
Potential investors should note several risks associated with the Aye Finance IPO. The company faces credit risk from borrower defaults, which could impact its financial health. The gross non-performing asset (NPA) ratio has risen from 2.49% in March 2023 to 4.21% in March 2025, and further to 4.85% by September 2025. Additionally, unsecured loans constituted a significant portion of its AUM, ranging from 30.26% to 41.47% in recent periods, which could affect recovery timelines.
Furthermore, anchor investors will be subject to lock-in periods: 50% of their allotted shares will be locked for 90 days from allotment, while the remaining 50% will have a 30-day lock-in period.
Promoters and Listed Peers
Aye Finance is led by co-founders Sanjay Sharma (Managing Director & CEO) and Vikram Jetley. Due to its investment structure, the company does not have a single identifiable promoter in the traditional sense. Its listed peers include SBFC Finance Ltd, trading at a price-to-earnings (P/E) ratio of 27.32, and Five-Star Business Finance Ltd, with a P/E of 12.07, as per the red herring prospectus (RHP).
Investors are advised to carefully review the RHP and consult with certified financial experts before making any investment decisions regarding the Aye Finance IPO.
