International Finance Corporation (IFC) plans to invest about Rs 130 crore ($20 million) in Kolkata-based Arohan Financial Services Pvt. Ltd via long-tenor debt.
Arohan will use the money to lend to micro, small and medium enterprises, the World Bank's private-sector investment arm said in a disclosure.
The proposed investment will help Arohan diversify its sources of funding and expand access to microfinance for borrowers who have little or no access to formal sources of financing, IFC said.
The investment proposal will be placed before IFC’s board on 10 June.
Last December, VCCircle reported that Arohan had shortlisted investment bankers to float its initial public offering (IPO).
In June last year, Arohan merged with Intellecash Microfinance Network Company Pvt. Ltd, one of its associate companies. Intellecash provides working capital and business to micro, small and medium enterprises.
Arohan, which was set up in in 2006, is among the largest NBFCs based out of eastern and northern India.
As of March 31 2018, the company had operations in nine states - West Bengal, Bihar, Assam, Jharkhand, Orissa, Chhattisgarh, Uttar Pradesh, Tripura and Meghalaya - through 435 branches. Its gross assets under management stood at around Rs 2,171 crore.
In March, Hong Kong-based private equity firm TR Capital Group had picked up around 10.5% stake in Arohan from existing investors Aavishkaar and Tano Capital.
Arohan's other investors include Michael and Susan Dell Foundation, Maj Invest Financial Inclusion Fund, and Aavishkaar Goodwell India Microfinance Development.
IFC's bets
IFC has struck a number of deals in the financial services space this year.
Last week, it proposed to invest $15 million (Rs 100 crore) in Aptus Value Housing Finance India to support financing for the affordable housing segment.
In April, online insurance platform Coverfox completed its $22-million (Rs 144 crore) Series C funding round, which was led by IFC.
Two months before that, IFC agreed to invest $49.86 million in non-banking financial company Altico Capital India.
Also in February, IFC had agreed to invest $75 million (around Rs 485 crore) through senior financing in L&T Housing Finance, a subsidiary of L&T Finance Holdings.