Aavishkaar Group-promoted Arohan Financial Services Pvt Ltd has filed for an initial public offering (IPO).
The Kolkata-based microlender’s public offer will see the issuance of shares amounting to Rs 850 crore. It will also have an offer for sale worth Rs 950 crore.
The entities that will take part in the offer for sale are Maj Invest Financial Inclusion Fund II, Michael & Susan Dell Foundation, Tano India Private Equity Fund II, TR Capital III Mauritius and Aavishkaar Goodwell India Microfinance Development Company II Ltd.
The total issue size would be around Rs 1,800 crore ($250 million), as per people in the know.
The company has said that it may raise Rs 150 crore via a pre-IPO placement. If the pre-IPO round takes place, then the fresh issue size will get reduced accoridngly.
Arohan Financial, which offers microcredit to women borrowers in financially under-penetrated and low-income states, will utilise fresh issue proceeds for augmenting capital base.
In late 2017, it shortlisted investment bankers to float an IPO before shelving the plans.
Its promoters -- Aavishkaar Venture Management Services and Intellectual Capital Advisory Services (I-Cap) -- are part of the Aavishkaar Group. As of September 2020, the Aavishkaar Group had assets in control of about $1billion across Asia.
Edelweiss Financial Services Ltd, ICICI Securities Ltd, Nomura Financial Advisory and Securities (India) Private Limited and SBI Capital Markets Limited are the book-running lead managers for the issue.
Arohan Financial
The firm, which was set up in 2006, is among the largest non-banking financial companies based out of eastern and northern India.
In June 2017, it merged with Intellecash Microfinance Network Company Pvt. Ltd, one of its associate companies.
As on September 30, 2020, Arohan Financial had served 2.21 million borrowers across 17 states and almost 77% of its microfinance portfolio was in non-urban areas of India with women constituting more than 97% of its total customers.
Between 2016-17 and 2019-20, as per a CRISIL report, Arohan Financial had the second-highest gross loan portfolio growth at 68% CAGR and stood amongst the top 5 NBFC-MFIs in India.
Arohan Financial also had the highest customer growth at 49% CAGR between FY18 and FY20.
The microfinance business of the company operates out of 710 branches across 11 states and the MSME lending business reaches across eight states through 10 branches.
Funding
Arohan Financial raised Rs 2 crore in 2006 with initial support from Bellwether Capital and then from India Financial Inclusion Fund and Michael & Susan Dell Foundation.
In 2008, MSDF, Lok Capital I, and Bellwether, along with private investor Swaminathan S Anklesaria Aiyar, invested an undisclosed amount. Bellwether, MSDF and Lok Capital again invested Rs 15 crore in 2010.
In 2012, Bellwether sold its entire stake while other investors such as MSDF, IFIF, IntelleCash and Aavishkaar Goodwell India Microfinance Development invested Rs 62 crore. Aavishkaar, MSDF and Aiyar invested more in 2013.
In 2015, Arohan raised Rs 60 crore from private equity firm Tano Capital to increase its net worth and expand operations.
Two years later, India Financial Inclusion Fund, which is managed by Caspian Impact Investments Pvt Ltd, exited Arohan Financial by selling 3.74% stake to Denmark-headquartered Maj Invest Holding.
In May 2018, International Finance Corporation (IFC), the World Bank's private-sector investment arm, invested Rs 100 crore.