Mubadala enters India’s financial services sector with Avanse investment

Avanse, backed by US-based private equity firm Warburg Pincus, provides loans to Indian students pursuing higher education

Mubadala's investment in Avanse is part of a plan to double the company’s exposure in Asia by 2030. Getty Images
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Mubadala Investment Company, Abu Dhabi’s strategic investment arm, has invested in Indian non-banking financial company Avanse Financial Services, as part of its expansion in Asia’s third-largest economy.

Mubadala, which did not disclose the value of the transaction, led a funding round through its affiliate Alpha Investment Company with participation from Avendus PE Investment Advisors.

The investment in Avanse, which provides education loans, marks Mubadala’s entry into the financial services sector in India and is part of a plan to double its exposure in Asia by 2030, the sovereign wealth fund said on Tuesday.

“The funds will enable Avanse to strengthen its position in the rapidly evolving education financing segment, focusing on creating unique customer experiences and achieving sustained profitable growth,” Mubadala said.

Avanse, backed by US-based private equity firm Warburg Pincus, provides loans to Indian students pursuing higher education at home and abroad.

It also offers financial assistance to educational institutions in India to aid expansion and cover operational funding.

The total demand for education finance products in India stands at $4.4 billion, as private schools increasingly cater to segments of the population that the public sector has not been able to reach or adequately serve, according to a report from Opportunity EduFinance, a London-based non-profit organisation.

In a report last year, India's credit rating agency Crisil said it expected education loans offered by the country's non-banking financial companies to increase by 40 per cent to 350 billion Indian rupees ($4.2 billion) in the fiscal year 2023-2024.

“The growth capital will enable us to strengthen our brand proposition, integrate digital solutions and innovate to build more depth into our product range,” said Amit Gainda, managing director and chief executive of Avanse.

Avanse’s assets under management stood at about Dh5.5 billion ($1.5 billion) as of December 2023.

Mubadala, which invests on behalf of the Abu Dhabi government, is at the heart of the emirate’s efforts to diversify its revenue base and generate income from sources other than oil.

Its interests span six continents and include the aerospace, semiconductors, metals and mining, renewable energy, oil and gas, and petrochemicals sectors.

It has also been boosting its portfolio in Asia, including in Japan, China, Korea and India, "in line with our focus on mega trends and global demographics", Khaldoon Al Mubarak, group chief executive and managing director of Mubadala, said at the Investopia conference in Abu Dhabi last month.

"Overall, sovereign funds now have the responsibility and opportunity to transform from asset allocators into enablers of global progress,” he said.

In February, Mubadala said it was investing in India’s Manipal Health Enterprises.

Last year, it also invested $525 million, together with BlackRock Real Assets, in Tata Power Renewables, one of the largest renewable energy companies in India.

Updated: March 26, 2024, 2:34 PM