IFC, a member of the World Bank Group, is investing $2.3 million (Rs 14 crore) as equity in start-up firm Avanse Financial Services Pvt Ltd to expand its ability to provide loans to Indian students pursuing higher education in India and overseas. Avanse is an associate company of Dewan Housing Finance Corporation Ltd.
IFC’s investment could help Avanse extend education loans to an estimated 90,000 students over seven years. In addition to providing start-up capital, IFC will advise Avanse to strengthen its credit appraisal and underwriting processes, and risk management systems.
“IFC’s investment is an endorsement of our business plan in promoting growth in an underserved market,” said Kapil Wadhawan, chairman, Avanse Financial. “With IFC’s global industry knowledge and expertise, Avanse can demonstrate the viability of financing higher education in India,’’ he said.
With over 150 million people in the 18-23 age group, India is one of the world’s largest education markets. Education loans for students of premier educational institutions are hard to come by.
“Private sector can play a significant role in improving access to quality education, especially in emerging markets,” said Serge Devieux, IFC director for South Asia. “IFC's investment in Avanse will help students access financing for pursuing higher education while shaping the market for education finance.”
IFC is one of the largest multilateral investors in private education in emerging markets, investing to improve access, lower costs and help students prepare for employment. IFC’s education portfolio stands at over $660 million across 42 projects in 24 countries with the total value of these projects at about $1.8 billion.
Dewan Housing is an existing client of IFC. In 2003, IFC provided a loan of around $12.5 million to the company. IFC has also co-invested in Aadhar Housing Finance, a company jointly promoted by DHFL Group and IFC that provides home loans for low-income segments.
In FY13, IFC’s investments climbed to an all-time high of nearly $25 billion.
(Edited by Joby Puthuparampil Johnson)