Arohan Financial shelves IPO plan for now, to focus on Rs 500 cr
Microfinance institution (MFI) Arohan Financial Services Ltd has put on hold its proposed initial public offering (IPO) for "at least 18-24 months", owing to "unexciting" market conditions for the past one year, Managing Director Manoj Kumar Nambiar said. The Kolkata-based company, which operates in 11 "low- income" states in east, northeast and central India, will, instead, focus on raising around Rs 1,800 crore in an external round of borrowing, he said.
"IPO is not on the cards right now as markets have not been very exciting for the past one year now. So, after re-evaluating the situation, we have decided to opt for an external round of borrowing than go for an IPO. We would look at listing after 18-24 months," Nambiar told PTI. Arohan Financial, a part of the Aavishkaar-Intellecap Group, would raise Rs 500 crore through primary borrowing and the rest by way of "secondary exits" (of older investors).
It has finalized a set of four investors for the primary round and hopes to complete the fundraising by January end next year. "The funds would help us improve our capital adequacy, look at new products and go deeper into existing geographies and foray into newer ones," the MD said. The company will enter the Rajasthan market by the first quarter of 2020-21 fiscal, Nambiar said, adding, the MFI set foot in Manipur in October, taking the total number of states to 11.
Arohan Financial claims to have a customer base of about 2.2 million, comprising mainly of women in rural and semi-urban towns, and a branch network of 700. The microfinance institution counts West Bengal, Odisha, Assam and Bihar among its "highly-penetrated" states.
Nambiar said the company has drawn up a '2025 Plan' of growing its loan portfolio by five-six times, expanding the number of branches to 2,000 and customer base to 5 million. "By 2025, we aim to achieve a loan portfolio of Rs 25,000 crore from about Rs 4,600 crore as on November 30, making us feature among the top three financial inclusion players in the geographies that we are present in," he said.
According to a report by the RBI-recognised Microfinance Institutions Networks (MFIN), the total number of microfinance accounts stood at 9.33 crore as on March 31, and its members collectively disbursed loans worth Rs 82,928 crore in 2018-19.
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