Arohan Financial to raise ₹1,000 crore through IPO

Kolkata-based NBFC microfinance provider Arohan Financial Services Ltd is looking to tap the capital market through an initial public offering.

According to Manoj Kumar Nambiar, Managing Director, Arohan, the company, which is part of the Aavishkaar-Intellecap group, will look to raise about ₹1,000 crore through the IPO.

It has already initiated talks with merchant bankers for the same.

“We are looking at an IPO in the next 18-24 months. We are focusing on building the foundation for our next phase of growth. The IPO will help bring in the capital required for the company’s future growth,” Nambiar told BusinessLine .

Since the beginning of the calendar year 2017, Arohan raised nearly ₹155 crore from existing as well as new investors, to help keep the company well capitalised and fund its growth plans.

The promoter companies Aavishkaar-Intellecap together hold a 32 per cent stake in Arohan. Some of the investors in the company include Tano Capital, Intellecash, Aavishkar Goodwell, Maj Invest, Aavishkaar Venture Management Services, Michael and Susan Dell Foundation and India Financial Inclusion Fund.

“These investors would typically look to invest, grow and invest and IPO will provide the necessary liquidity,” he said.

With a view to de-risking its portfolio, Arohan is looking to diversify into newer markets.

The company, which was predominantly focused on West Bengal, with nearly 65 per cent of its business coming from the State about three-to-four years ago, moved into other markets including Bihar, Jharkhand, Odisha, Assam, Meghalaya and Chhattisgarh. It recently forayed into eastern Uttar Pradesh and Tripura.

“The Andhra Pradesh crisis was an eye opener for all of us in the industry so the idea was to de-risk the portfolio by spreading out our business,” he pointed out.

The share of Bengal to its total business has come down to 38 per cent at present, from the previous65 per cent, and this has been primarily because it has been steadily growing its business in other States.

Arohan’s total loan outstanding for the quarter ending June 30, 2017 was ₹1,127 crore. The company is looking to close the financial year with a loan book of ₹2,000 crore.

Though the delinquency rates had gone up sharply post demonetisation, things have been more manageable in the past couple of months, he said.

“The collection efficiency in the months following demonetisation in November 2016 had dropped to below 80 per cent. That has now improved to above 90-95 per cent. But even that is high for an industry like ours. We need to have an efficiency of 99 per cent,” he said.

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