Money & Banking

Belgium’s Incofin to invest Rs 15 cr in Arman Financial

Virendra Pandit Ahmedabad | Updated on November 23, 2011 Published on November 23, 2011

Arman Financial Services Ltd, an Ahmedabad-based non-banking financial company (NBFC) listed on the Bombay Stock Exchange (BSE), on Wednesday announced that it has received new private equity funding of Rs 15 crore from Incofin, a specialised fund- and investment-management company based in Belgium.

The board of directors of Arman, which entered the micro-finance vertical last year, have approved the proposed equity investment, which will now be sent to the company's shareholders for final approval.

A memorandum of understanding in this regard was signed by Mr Jayendra Patel (Vice-Chairman and Managing Director, Arman Financial) and Mr Geert Peetermans (Chief Investment Officer, Incofin) here on Wednesday.

Arman has approved the preferential share allotment for Rs 15 crore ($3 million) at a price of Rs 56.95 a share, which is at a significant premium over its book value and stock price. On Wednesday, the company's scrip closed 1.01 per cent up at Rs 30 on the BSE. Incofin proposes to subscribe to new equity shares of Rs 7.735 crore and invest the remaining amount as compulsorily convertible debentures, convertible into equity in 18 months with a nominal interest rate, Mr Patel said at a press conference.

Since March 31, the company's stock has risen to Rs 30 a share from Rs 16, a 92 per cent increase in less than eight months after a triple-digit growth since the last year. Arman has a net worth of Rs 26 crore, he said.

Arman Financial, whose non-performing assets stand at 0.66 per cent, is active in the verticals of secured finances for two and three-wheelers and unsecured, micro-financial loans up to Rs 15,000 given to underserved segments in Gujarat, with almost half the share of each of the two portfolios, totalling nearly Rs 50 crore of recoverables. So far, it has financed 45,000 loan-seekers in the two verticals.

A mainly Gujarat-centric profit-making, dividend-paying company, Arman Financial's initial public offering in 1995 was oversubscribed 55 times. He said the entire microfinance portfolio in Gujarat at present was only about Rs 250 crore, as against an estimated potential of Rs 10,000 crore.

Mr Peetermans said his company was active in 10 States across India for the last three years and its tie-up with Arman was the fifth in the country, where it has so far invested Rs 55 crore. Across 40 countries, it has invested in 100 micro-financial institutions as a long-term investor interested in “impact financing” for the wider society.

He said Incofin had €300 million worth of assets under management and its investors are mainly Europe- and US-based.

Published on November 23, 2011
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