MICROCAPITAL BRIEF: Incofin Invests $3m in Equity in Arman Financial Services Limited of India

Arman Financial Services Limited (Arman), a non-bank finance company based in India, has announced that its board has approved a proposed equity investment from Belgian company Incofin Investment Management (Incofin). Arman’s board of directors has approved the preferential share allotment of INR 15 crore (USD 3 million) at a price of INR 56.95 (USD 1.09) per share. Incofin has proposed to subscribe to equity shares worth INR 7.735 crore (USD 1.48 million) with the remaining amount acquired as compulsorily convertible debentures (CCDs). Unitus Capital participated in this deal as the financial advisor, structurer and arranger to Arman.

Jayendra Patel, Vice-Chairman & Managing Director of Arman, said, “We strongly feel that the partnership with Incofin is the logical next step for Arman to continue with our growth. Apart from equity, Incofin will also bring in the diverse geographical experience it has working with various microfinance institutions across the globe, which will enable us to implement global best practices and help Arman to better its existing processes, human capital, and corporate governance. Arman will continue to strive for growth and profitability for its shareholders, but with a vision to empower society through financial inclusion and sustainable livelihood.”

The partnership aims to enhance the financial services offered to the underserved segment in the Indian state of Gujarat. According to Aditya Bhandari, Regional Director of Incofin South Asia, “Arman is a solid company with an attractive business mix of secured and unsecured products. On one hand it offers a very high rural-cum-social angle and on the other hand it delivers well-accepted commercial returns. Arman has a long standing positive track record and is now ready to leverage its regional strengths for a strong business footing. Like our other investee companies, Arman is also focusing on controlled growth rather than irrational exponential growth. We are delighted to join hands.”

By Kristha Abores, Research Associate

About Arman Financial Services Limited:
Established in November 1992, Arman Financial Services Limited is a non-banking finance company (NBFC) based in Gujarat, India. Arman offers secured vehicle loans as well as unsecured loans for income generating activities such as livestock rasing. As of March 2011, Arman reported total assets of INR 490 million (USD 9.36 million). It reported a net profit of INR 234.27 lakh (USD 447,600) for the half year ending in September 2011 and INR 181.33 lakh (USD 346,500) for the year ending in March 2011.

About Incofin:
Incofin Investment Management is a private Belgian company that develops and manages funds investing in microfinance institutions (MFIs) in developing countries. As of January 31, 2011, Incofin manages six facilities with total outstanding investments of EUR 152 million (USD 206 million). As of 2011, Incofin has invested in 91 MFIs in 38 countries.

About Unitus Capital:
An affiliate of Unitus Labs, a US-based nonprofit, Unitus Capital is a financial advisory firm that specializes in arranging capital for microfinance institutions (MFIs) and other enterprises that aim to benefit the poor. Based in Bangalore, India, Unitus Capital offers financial advisory and capital markets services to clients in Asia. Between 2004 and 2010, Unitus Capital reports having arranged USD 25 million in debt capital for microfinance institutions (MFIs).

Sources and Additional Resources:

[1] Information provided by Unitus Capital to MicroCapital

MicroCapital.org article, October 12, 2011, “MICROCAPITAL BRIEF: Incofin Lends $3.6m to Microfinance Institutions Finance for Development of Azerbaijan, Asian Credit Fund of Kazakhstan, Kompanion of Kyrgyzstan,” https://www.microcapital.org/microcapital-brief-incofin-lends-3-6m-to-mic…

MicroCapital.org article, September 2, 2011, “MICROCAPITAL BRIEF: Incofin Lends $9m to Microfinance Institutions (MFIs) PRIDE Tanzania; LAPO of Nigeria; Sinapi Aba Trust, FASL of Ghana,” https://www.microcapital.org/microcapital-brief-incofin-lends-9m-to-micro…

MicroCapital.org article, June 3, 2011, “MICROCAPITAL BRIEF: LeapFrog Partners With Unitus Capital Looking to Invest $40m to Increase Microinsurance Penetration in India,” https://www.microcapital.org/microcapital-brief-leapfrog-partners-with-un…

MicroCapital.org article, January 26, 2009, “MICROCAPITAL STORY: India Arman Financial Moves into Microfinance; Microfinance Portfolio Will Be Core Business,” https://www.microcapital.org/microcapital-story-india-arman-financial-mov…

MicroCapital Universe Profile: Arman Financial Services Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Arman+Financial+Services+Limited

MicroCapital Universe Profile: Incofin Investment Management, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inc…

MicroCapital Universe Profile: Unitus Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Uni…

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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