Aye Finance IPO

Incorporation & History

• Incorporated on August 12, 1993 as Doda Finance Private Limited in Punjab

• Renamed Aye Finance Private Limited in March 2014

• Converted into a public limited company on December 10, 2024

• RBI-registered NBFC under Section 45-IA of RBI Act, 1934

• Operates as a systemically important non-deposit-taking NBFC (ND-NBFC)

Registered & Corporate Offices

Industry & Sector

• Sector: Financial Services

• Industry: NBFC – MSME Lending

Products & Services

• Secured MSME loans (property / asset backed)

• Unsecured & partially secured business loans

• Working capital & business expansion loans

• Average ticket size: ₹0.10–0.18 million

Industry Overview

India’s MSME sector contributes ~30% to GDP but remains structurally under-served by banks. NBFCs bridge this gap through flexible underwriting and field-based credit assessment.

Market Size & Growth

• MSME credit gap estimated at ₹25+ trillion (CRISIL)

• NBFC MSME loan book growing at 20%+ CAGR

• Micro-enterprise lending is the fastest-growing sub-segment

Regulatory Environment

• RBI supervision under NBFC-ML framework

• Enhanced capital adequacy, governance & disclosure norms

Outlook

• Formalisation (GST, UPI, digital trails) strengthens credit underwriting

• Demand driven by manufacturing, trading & services MSMEs

What Aye Finance Does

Aye Finance provides small-ticket business loans to micro-scale enterprises using a cash-flow-based underwriting model, supported by on-ground field presence and technology.

Target Customers

• Micro manufacturers

• Traders

• Service enterprises

• Allied agriculture businesses

Value Chain Position

Capital Providers → Aye Finance → Micro MSMEs → Local Economy

AUM Mix (H1 FY26)

Key Risks (RHP-Specific)

• Credit Risk: MSME cash-flow volatility

• Regulatory Risk: RBI tightening NBFC norms

• Funding Risk: Dependence on borrowings & capital markets

• Operational Risk: Large branch-led workforce

• First-time Listing Risk: No prior market for shares

• No identifiable promoter

• Earlier founders: Sanjay Sharma & Vikram Jetley

• Company transitioned to professionally managed model

• Promoter classification withdrawn post-2022

Key Committees

• Audit Committee

• Risk Management Committee

• Nomination & Remuneration Committee

• CSR Committee

• Stakeholders’ Relationship Committee

Compliant with SEBI LODR & RBI governance norms.

• No material criminal litigations

• Routine tax & regulatory matters disclosed

• Contingent liabilities mainly income tax & GST demands

• RBI Certificate of Registration (NBFC)

• In-principle approvals from BSE & NSE

• GST registrations across states

Balance Sheet Snapshot (₹ million)

• Bank borrowings

• Listed & unlisted NCDs

• Lease liabilities

Total financial liabilities FY25: ₹46,029 million

• Expand branch network in underserved regions

• Maintain granular loan book & risk controls

• Improve cost efficiency through technology

• Strengthen liability diversification

• Book-building process

• Benchmarked against MSME NBFC peers

• Valuation linked to earnings growth & ROE

• Face value: ₹2 per share

• ESOPs: 2016, 2020 & 2024 schemes

• No promoter holding

• Institutional & public shareholders

• Selling shareholders include global PE funds

• No fixed dividend payout

• Focus on growth & capital adequacy

• Capital gains tax as per holding period

• Dividend taxable in shareholder’s hands

• Offer Agreement

• Registrar Agreement

• Escrow & Sponsor Bank Agreements

100% Book-Built Issue

• One vote per share

• Dividend entitlement (if declared)

• Residual claim on assets

• Pari-passu rights

• SEBI ICDR compliance

• RBI disclosures

• CSR compliance

• Material contracts available for inspection

Aye Finance Limited has disclosed all related party transactions in compliance with Ind AS 24, the Companies Act, 2013, and SEBI ICDR Regulations. The Company confirms that all such transactions were conducted at arm’s length and in the ordinary course of business, unless stated otherwise.

1. List of Related Parties (as per RHP)

A. Key Managerial Personnel (KMP) & Directors

B. Subsidiary / Related Entity

2. Nature of Related Party Transactions

A. Transactions with Key Managerial Personnel

These transactions relate primarily to employee compensation and benefits, approved by the Board and shareholders wherever required.

All payments are in line with approved remuneration policies and statutory limits.

B. Transactions with Subsidiary (FAME)

3. Outstanding Balances with Related Parties

As per the RHP:

• There are no material outstanding receivables or payables from/to directors, KMPs, or related entities that could adversely affect the Company’s financial position.

• Outstanding balances, if any, arise from routine employee-related transactions and are settled in the normal course of business.

4. Guarantees, Loans & Advances to Related Parties

The RHP clearly states:

• No loans or advances have been granted to directors or KMPs

• No corporate guarantees issued on behalf of related parties

• No material credit exposure to related entities

This significantly reduces governance and conflict-of-interest risk.

5. Arm’s Length Confirmation & Governance Controls

The Company has confirmed that:

• All related party transactions are:

  • At arm’s length

  • In the ordinary course of business

  • Approved by the Audit Committee

• Disclosures comply with:

  • Ind AS 24

  • Section 188 of the Companies Act, 2013

  • SEBI ICDR Regulations

6. Investor Takeaway (Why This Matters)

• No promoter-controlled transactions

• No fund diversion risk

• Professionally managed company

• Transparent disclosures and strong governance

This reduces related-party risk, which is a key concern for public market investors in NBFC IPOs.