AAVAS FINANCIERS LIMITED

Registered and Corporate Office: 201-202, 2nd Floor, South End Square, Mansarover Industrial Area, Jaipur 302 020, Rajasthan, India Tel: +91 14 1661 8800 Fax: +91 14 1661 8861

Aavas Financiers Limited: Initial Public Offer to open on September 25, 2018* and to close on September 27, 2018

The Floor Price is 81.80 times the face value and the Cap Price is 82.10 times the Face Value of the Equity Shares.

Price Band**: Rs. 818 to Rs. 821 per Equity Share

Aavas Financiers Limited (the “Company”), proposes to open on September 25, 2018*, an initial public offering of equity shares of Face Value of Rs. 10 each (“Equity Shares”) for cash at a Price per Equity Share (including a Share Premium) (“Offer”) comprising a fresh issue of up to [●] Equity Shares aggregating up to Rs. 4,000 million (“Fresh Issue”) and an offer for sale of up to 16,249,359 Equity Shares including an Offer For Sale of up to 8,815,439 Equity Shares by Lake District Holdings Limited (“Lake District”), up to 4,281,907 Equity Shares by Partners Group ESCL Limited (“ESCL” and together with Lake District, “Promoter Selling Shareholders”), up to 236,339 Equity Shares by Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1 (“Kedaara AIF-1” or “Investor Selling Shareholder”), and up to 1,879,110 Equity Shares by Partners Group Private Equity Master Fund LLC (“Master Fund” Or “Promoter Group Selling Shareholder”) and up to 911,564 Equity Shares by Sushil Kumar Agarwal and up to 125,000 Equity Shares by Vivek Vig (Together, The “Other Selling Shareholders” and together with the Promoter Selling Shareholders, Investor Selling Shareholder and Promoter Group Selling Shareholder, the “Selling Shareholders” and such Offer For Sale, the “Offer For Sale”) .

The Bid/Offer Period will close on September 27, 2018. The Price Band for the Offer is from Rs. 818 to Rs. 821 per Equity Share. Bids# can be made for a minimum lot of 18 Equity Shares and in multiples of 18 Equity Shares thereafter.

The Equity Shares are proposed to be listed on BSE and NSE.

The Global Co-ordinators and Book Running Lead Managers (“GCBRLMs”) to the Offer are ICICI Securities Limited, Citigroup Global Markets India Private Limited, Edelweiss Financial Services Limited and Spark Capital Advisors (India) Private Limited. The Book Running Lead Manager (“BRLM”) to the Offer is HDFC Bank Limited.

*Our Company and the Selling Shareholders, in consultation with the GCBRLMs and BRLM, may consider participation by Anchor Investors, in accordance with the SEBI ICDR Regulations. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Offer Opening Date i.e., Monday, September 24, 2018.

The Offer is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”), through the Book Building Process and in compliance with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “SEBI ICDR Regulations”), wherein not more than 50% of the Offer shall be allocated to Qualified Institutional Buyers (“QIBs”) (the “QIB Category”), provided that the Company and the Selling Shareholders may, in consultation with the GCBRLMs and BRLM, allocate up to 60% of the QIB Category to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations (the “Anchor Investor Portion”), of which one-third is to be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (the “Anchor Investor Allocation Price”). In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Category. Further, 5% of the QIB Category (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis only to Mutual Funds, and the remainder of the QIB Category shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Offer shall be available for allocation to Retail Individual Investors, in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Investors (except Anchor Investors) shall mandatorily participate in this Offer only through the Application Supported by Blocked Amount (“ASBA”) process, and shall provide details of their respective bank account in which the Bid Amount will be blocked by the SCSBs. Anchor Investors are not permitted to participate in the Anchor Investor Portion through the ASBA process.

Disclaimer:

AAVAS FINANCIERS LIMITED is proposing, subject to, applicable statutory and regulatory requirements, receipt of requisite approvals, market conditions and other considerations, to make an initial public offering of its Equity Shares and has filed the red herring prospectus dated September 12, 2018 (“RHP”) with the RoC. The RHP shall be  available on the websites of SEBI, BSE, NSE at www.sebi.gov.in, www.bseindia.com and www.nseindia.com, respectively, and is available on the websites of the GCBRLMs, i.e. ICICI Securities Limited, Citigroup Global Markets India Private Limited, Edelweiss Financial Services Limited and Spark Capital Advisors (India) Private Limited at www.icicisecurities.com, www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm, www.edelweissfin.com and www.sparkcapital.in, respectively and BRLM, i.e. HDFC Bank Limited at www.hdfcbank.com. Potential investors should note that investment in equity shares involves a high degree of risk and for details relating to the same, see “Risk Factors” beginning on page 17 of the RHP. Potential investors should not rely on the DRHP for any investment decision.

[The Equity Shares offered in the Offer have not been and will not be registered under the U.S. Securities Act of 1933, as amended (“U.S. Securities Act”) or any state securities laws in the United States, and unless so registered may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, such Equity Shares are being offered and sold (i) outside of the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdiction where those offers and sales occur; and (ii) to “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act), pursuant to the private placement exemption set out in Section 4(a) of the U.S. Securities Act.]

The investors are advised to refer to page 454 of the RHP for the full text of the Disclaimer Clause of SEBI.

In case of a revision in the Price Band, the Bid/ Offer Period will be extended for at least three additional Working Days after such revision of the Price Band subject to the Bid/ Offer Period not exceeding a total of 10 Working Days.

Any revision in the Price Band and the revised Bid/ Offer Period, if applicable, will be widely disseminated by notification to the Stock Liability of the members of the Company: Limited by by issuing a press release, and also by indicating the change on the websites of the GCBRLMs and BRLM and at the terminals of the members of the Syndicate.

#Bidders/Applicants should note that on the basis of PAN, DP ID and Client ID as provided in the Bid cum Application Form, the Bidder/Applicant may be deemed to Disclaimer Clause of NSE (Designated Stock Exchange): It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that have authorised the Depositories to provide to the Registrar to the Offer, any requested Demographic Details of the Bidder/Applicant as available on the records of the Offer Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Offer Document. The investors are the depositories. These Demographic Details may be used, among other things, for unblocking of ASBA Account or for other correspondence(s) related to the advised to refer to page 463 of the RHP for the full text of the Disclaimer Clause of NSE. Offer. Bidders/Applicants are advised to update any changes to their Demographic Details as available in the records of the Depository Participant to ensure []accuracy of records. Any delay resulting from failure to update the Demographic Details would be at the Bidders’/Applicants’ sole risk. Bidders/Applicants ensure that PAN, DP ID and the Client ID are correctly filled in the Bid cum Application Form. The PAN, DP ID and Client ID provided in the Bid cum Application Form should match with the PAN, DP ID and Client ID available in the depository database, otherwise, the Bid cum Application Form is liable to be rejected. [.]

Contents of the Memorandum of Association of the Company as regards its objects: For information on the main objects of the Company, please see the section entitled must rely on their own examination of our Company and the Offer “History and Certain Corporate Matters” on page 173 of the RHP and Clause III of the Memorandum of Association of the Company. The Memorandum of Association of the Exchange Board of India (“SEBI”)is a material document for inspection in relation to the Offer. For further details, please see the section entitled “Material Contracts and Documents for Inspection” on page 574 of the RHP.

Amount of share capital of the Company and Capital structure: The authorised, issued, subscribed and paid up share capital of the Company as on the date of the RHP is as follows: The authorised share capital of the Company is ` 850,000,000 divided into 85,000,000 Equity Shares of ` 10 each. The issued, subscribed and paid-up share capital of the Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “SEBI ICDR Regulations”), wherein Company is ` 737,230,040 divided into 73,723,004 Equity Shares of ` 10 each. For details, please see the section entitled “Capital Structure” beginning on page 571 of the RHP.

Liability of the members of the Company: Limited by shares

Names of signatories to the Memorandum of Association of the Company and the number of Equity Shares subscribed by them: Given below are the names of the signatories of the Memorandum of Association of our Company and the number of Equity Shares subscribed by them at the time of signing of the Memorandum of Association of our Regulations  – 100 Equity Shares by Sanjay Agarwal and 9,900 Equity Shares by AU Small Finance Bank Limited (formerly, Au Financiers (India) Limited).

Listing: The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the Stock Exchanges. We have received in-principle approvals from BSE and NSE for the listing of the Equity Shares pursuant to letters dated July 17, 2018 and July 25, 2018 respectively. For the purposes of this Offer, NSE is the Designated Stock Exchange. A copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to the RoC in accordance with Section 26(4) of the Companies Act 2013. For details of the material contracts and documents available for inspection from the date of the Red Herring Prospectus up to the Bid/ Offer Closing Date, see “Material Contracts and Documents for Inspection” on page 571 of the RHP.

Disclaimer Clause of the SEBI: SEBI only gives its observations on the offer documents and this does not constitute approval of either the Offer or the specified securities or the  Offer document. The investors are advised to refer to page 454 of the RHP for the full text of the Disclaimer Clause of SEBI.

Disclaimer Clause of BSE: It is to be distinctly understood that the permission given by BSE should not in any way be deemed or construed that the RHP has been cleared or approved by BSE nor does it certify the correctness or completeness of any of the contents of the RHP. The investors are advised to refer to page 463 of the RHP for the full text of the Disclaimer Clause of BSE.

Disclaimer Clause of NSE (Designated Stock Exchange): It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Offer Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Offer Document. The investors are advised to refer to page 463 of the RHP for the full text of the Disclaimer Clause of NSE.

Disclaimer clause of NHB: “The company is having a valid Certificate of Registration dated 19-04-2017 issued by the National Housing Bank (NHB) under Section 29A of the National Housing Bank Act, 1987. However, the NHB does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinion expressed by the company and for repayment of deposits/discharge of liabilities by the company.”

General Risks: Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in the Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer including the risks involved. The Equity Shares have not been recommended or approved by the Securities and  the Exchange Board of India (“SEBI”), nor does the SEBI guarantee the accuracy or adequacy of the contents of the Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page 17 of the RHP.

**Risks to Investors

1. The five Merchant Bankers associated with the issue have handled 45 public issues in the past three years out of which 14 issues closed below the issue price on listing date.

2. The Price/Book ratio based on Net Assets Value for 2018 (the latest full financial year) for the issuer at the upper end of the Price band is as high as 5.23 as compared to the average industry peer group ratio of 5.92.

III. Average cost of acquisition of equity shares for the selling shareholders viz. Lake District, ESCL, Master Fund, Kedaara AIF-1, Sushil Kumar Agarwal and Vivek Vig, are ` 245.07, ` 245.07, ` 245.07, ` 245.07, ` 201.76 and ` 251.24, respectively and offer price at upper end of the price band is significantly high at ` 821

All capitalized terms used herein and not specifically defined shall have the same meaning as ascribed to them in the RHP.