Arohan Financial Services Ltd IPO

Last Updated: 25 August 2022 4:41 PM by 5Paisa

Arohan Financial Services, Kolkata based microfinance lender, is in its final stage of preparations of IPO. The fresh issue size will be worth Rs. 850 crores (including Pre-IPO placement value) and offer for sale of 2.7 crore equity shares. The lender will be looking to raise up to Rs 150 crore from pre-IPO placement. 
Existing investors such as Tano India, Michael & Susan Dell Foundation, Maj Invest, TR Capital and Aavishkaar Goodwell India Microfinance Development Company II (AG II) will be looking to partially exit through the sale.
Qualified institutional buyers (QIBs) can subscribe to up to 50% of the IPO, whereas retail individual investors will have up to 35% of the reserved portion. 15% of the issue size will be set aside for non-institutional investors. Furthermore, eligible employees of this company can subscribe up to 5% of initial offer.
Edelweiss Financial Services, ICICI Securities, Nomura Financial Advisory & Securities and SBI Capital Markets are book running lead managers for the issue.

Objective of the issue

- Fulfilment of general corporate purposes
- Augmenting the capital base
- Prepayment or repayment of the entire or a small part of its outstanding borrowings

Arohan, set up in 2006, is the largest NBFC-MFI in the eastern Indian region with Rs 4600 crore gross loan portfolio in FY21. It raised Rs 189 crore in February from ASK Financial Holding, Kiran Vyapar Ltd and Arohan ESOP Trust at Rs 210 per share.
The Gross Loan Portfolio (“GLP”) was Rs. 48.57 billion and making it the largest NBFC-MFI in Eastern India and the fifth largest NBFC-MFI in India based on Gross Loan Portfolio. Between FY17 to FY20, it had the second highest GLP CAGR of 68.00% among the top five NBFC-MFIs in India, as well as the highest customer growth among the top five NBFC-MFIs at 49.00% CAGR between FY18 to FY20.

It operates in low-income, unpenetrated states of the country. These included 12 of the 14 Low Income States in India. Its microfinance business’ branch network consisted of 710 branches in 11 states and MSME lending business’ branch network consisted of 10 branches in eight states. It serves approximately 2.21 million borrowers in 17 states. 

The offerings of Arohan Financial Services include credit as well as insurance products. The former includes income-generating loans and other forms of financial assistance, while the latter covers life and health insurance products.

It is focussed on optimising customer sourcing channels, maintaining well-established loan origination, credit underwriting and loan management processes, as well as adopting and integrating technology into the business to improve lending outcomes and operational efficiency.