Arohan Financial Services in talks with PE funds to raise capital: MD

Microfinance institution Arohan Financial Services Ltd is in talks with private equity funds to raise capital to support its growth plans, Managing Director Manoj Kumar Nambiar said.

Promoted by the Aavishkaar Group, the Kolkata-based MFI is targeting Rs 7,000 crore as funds under management in the current fiscal, including both debt and equity, he said. “We are now in talks with a few foreign PE funds to raise funds after our IPO plans were shelved. There is enough potential to tap the market for resources, and the RBI guidelines are favourable for functioning of MFIs, the most prominent being deregulation of pricing of loans, Nambiar told PTI.

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The MFI is keen to allow the exit of some existing investors, as well as raise funds through issue of fresh shares. Nambiar said AFS plans to raise Rs 1,800 crore, out of which Rs 1,000 crore will be through issue of fresh shares and the balance for existing investors to make an exit. He said after finalising the deal with the PE funds, three existing investors will exit, and it is expected that the transaction will be completed by September.

The company will take another shot at IPO after two-three years, he said. With a net worth of around Rs 1,023 crore as on March 2022, AFS aims at supporting 20 million families by 2025, Nambiar said. After the deal, the net worth will increase by an additional Rs 1,000 crore. In February, AFS had filed a DRHP with SEBI for IPO, the validity of which was till April 2022. “The main reasons for dropping the IPO plans were the second and third waves of the COVID-19 pandemic and the subsequent Russia-Ukraine conflict, which led to market volatility while investors decided to hold back on their investments, Nambiar said.