Microfinance institution Arohan Financial Services, a part of the Aavishkaar-Intellecap Group, has raised nearly Rs 200 crore ($24 million) from Investment Fund for Developing Countries (IFU), a development finance institution backed by the Denmark government.
The move comes after the micro lender scrapped its plans to float an initial public offering (IPO) due to tough macroeconomic conditions. Arohan counts private equity firm Tano Capital and secondaries specialist TR Capital among its backers.
The Kolkata-based firm, in March 2023, had raised nearly Rs 91 crore ($11 million) from another offshore backer, the Dutch development bank FMO, before the latest IFU investment.
Arohan will use the capital to grow its business as well as for greening its services, IFU said in a release. It will also use the funds to expand the footprint and increase the impact by reaching out to poor and vulnerable clients with no previous access to credit.
IFU has made the investment on behalf of the Danish SDG Investment Fund, which is backed by large Danish pension funds and private investors. The fund, which has a corpus of around $700 million, is backed by six Danish pension funds, including PKA, PensionDanmark, PFA, ATP, P+ and PenSam.
Arohan has a client base of around two million customers in India, out of which over 98% are women. Its activities are spread across 15 states and 250 districts.
“Arohan is a leading microfinance institution in India that has had a focus on rural population, states with low financial inclusion, hence creating a strong impact. We believe that our investment can enable Arohan to further strengthen its impact by assisting even more people in India in augmenting their income and enhancing their lives” said Deepa Hingorani, senior vice president of IFU.
In the financial year 2022-23, the company saw a slight improvement in its financial health with a decent rise in its income. The company’s net profit for the financial year surged nearly 20% to Rs 71 crore from Rs 61 crore in the fiscal year before. On the other hand, its revenue from operations increased to Rs 931 crore from Rs 859 crore in FY22.
"With Covid clearly behind us, we look forward to scaling the business over the next few years in this priority area for the country," said Manoj Kumar Nambiar, managing director at Arohan.
