Ahmedabad-based non-banking financial company Arman Financial Services Ltd has raised Rs 50 crore ($7.6 million) through compulsorily convertible debentures from SAIF Partners, the company said.
The multi-stage fund manager invested in the company from its $350-million fifth fund, SAIF Partners India V Ltd, through subscriptions to 1,666,667 CCDs, at Rs 300 apiece.
The CCDs and the accrued unpaid interest will convert into 18,90,417 shares, having a conversion price of Rs 300, apiece, within 18 months for an aggregate investment of up to Rs 56.71 crore, the company said in a press note. This will translate into a 24.84% stake Arman Financial Services.
The fresh capital will be deployed to increase the loan book of the company, especially in its microfinance and MSME divisions, to maintain sufficient capital and meet the RBI’s capital adequacy norms, and to fund their regional expansion and product diversification.
Jayendra Patel, vice-chairman and MD of Arman Financial Services, said the increase in capital base will allow the company to continue growing its loan book, expand geographically, and diversify its product portfolio.
Arman Financial executive director Aalok Patel said SAIF will not only provide the necessary capital to fund the company’s expansion strategy, but will also help by bringing in diverse multi-industry knowledge to enable Arman implement global best practices.
Mridul Arora, managing director at SAIF Partners, has been appointed as a non-executive additional director at Arman Financial Services. He focuses on financial sector investments for SAIF Partners.
Arman Financial operates across three business segments, including two-wheeler financing, micro-enterprise (MSME) lending and microfinance loans. The microfinance division is operated through its wholly-owned subsidiary, Namra Finance Ltd. The micro-enterprise lending division was launched in August 2016.
Currently, the company’s consolidated loan book stands at Rs 425 crore. It has presence in five states – Gujarat, Madhya Pradesh, Uttar Pradesh, Maharashtra and Uttarakhand – through its network of 122 branches, and an employee strength of over 1,000.
Its consolidated assets under management stood at Rs 362.46 crore as on 31 December 2017.