Warburg Pincus to buy 80% stake in Wadhawan's education loan arm
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Private equity firm Warburg Pincus has agreed to acquire an 80% stake in the education loan arm of financial services group Wadhawan Global Capital Ltd.

Warburg Pincus will buy a 49.04% stake in Avanse Financial Services Ltd from Wadhawan Global and 30.63% stake from Dewan Housing Finance Corporation Ltd. 

International Finance Corporation, the World Bank's private-sector investment arm, holds the remaining 20% stake in Avanse.

Neither Warburg nor Wadhawan revealed financial details of the deal. However, the PE firm said in a statement it will infuse Rs 300 crore in Avanse for future growth.

The planned primary infusion will increase the company’s net worth, Vishal Mahadevia, Warburg’s India head, said in a statement.

Avanse was founded in 2013 and has funded more than 15,000 students studying in institutions in 45 countries. The company has assets in management of more than Rs 2,900 crore, the company said.  

Mumbai-listed Dewan Housing said in a stock-exchange filing that the proposed transaction is subject to regulatory approvals and certain other conditions.

Consulting firm EY was the financial adviser on the transaction.

The deal is the latest in a series of asset sales by Wadhawan and its flagship unit Dewan Housing to pare debt and ease investor concerns related to a liquidity crunch that plagued the broader non-banking financial sector after defaults by Infrastructure Leasing & Financial Services Ltd last year. Dewan Housing has also been accused of financial misconduct, though it has denied the allegations.

Wadhawan Group chairman Kapil Wadhawan had said in February that the group planned to sell a stake in its education loan business and some units, including Dewan Housing itself, to cut debt.

Just last month, Wadhawan Global and Dewan Housing agreed to sell their mortgage lending unit Aadhar Housing Finance Ltd to Blackstone.

In late January, global alternative investment management firm Oaktree Capital Management LP invested Rs 1,375 crore to buy loans from Dewan Housing.

In December, Dewan Housing had agreed to sell its entire stake in the mutual fund business DHFL Pramerica to its US joint venture partner Pramerica Financial to focus more on its core business. 

For Warburg Pincus, the deal adds to its growing financial services bets on Indian companies. The PE firm had, in December, led an investment of Rs 520 crore (around $75 million) in Delhi-headquartered Fusion Microfinance to mark its first bet on a microlender. Warburg had earlier backed non-banking financial company Capital First, ICICI Lombard General Insurance Company and AU Small Finance Bank.

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