Arohan Financial Services IPO prospectus filed to raise INR1,750 crore


Kolkata-based microfinance company Arohan Financial Services has filed draft prospectus with SEBI, seeking permission to launch its IPO. The MFI player focuses on the unserved and underserved states across the country. According to market sources, Arohan Financial Services IPO will mobilize around INR1,750 crore.

The IPO will comprise of a fresh issuance of shares amounting to INR850 crore planned to be used towards augmenting its capital base. Arohan Financial Services expects these funds to be deployed in FY2022.

In addition, the company’s existing shareholders Maj Invest Financial Inclusion Fund II K/S, Michael & Susan Dell Foundation, Tano India Private Equity Fund II, TR Capital III Mauritius and Aavishkaar Goodwell India Microfinance Development Company II Ltd plan to sell 27,055,893 shares as part of an Offer for Sale (OFS).

The company also plans to undertake a pre-IPO placement of INR150 crore. If the investment goes through, the fresh issuance portion of the IPO will be reduced by this amount.

Arohan Financial Services IPO will have 35% reservation for retail investors while 15% will be earmarked for non-institutional investors (NII) and 50% for qualified institutional buyers (QIB).

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Strong Growth & Profitability

Arohan Financial Services has a rich operating history of nearly 15 years and it has served approximately 2.21 million borrowers across 17 states. In terms of gross loan portfolio, it is the largest microfinance player in Eastern India as of 30 September 2020.

The microfinance business of the company operates out of 710 branches across 11 states and the MSME lending business has a reach across 8 states through its 10 branches.

As the table highlights, the company has been able to post strong growth in business in recent years while also retaining its profitability in double digits.

Arohan Financial Services’ financial performance (in INR crore)

  FY2018 FY2019 FY2020 H1 FY2021
Revenue 327.9 651.6 934.5 507.4
Expenses 280.4 474.5 766.9 425.9
Net income 31.0 127.6 126.8 62.6
Net margin (%) 9.5 19.6 13.6 12.3

Arohan Financial Services IPO will be managed by Edelweiss Financial Services, ICICI Securities, Nomura Financial Advisory and Securities, and SBI Capital Markets.



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