MICROCAPITAL BRIEF: Microfinance Institution Arohan of India Files for IPO, Early Investors to Exit, Deals May Total $247m

The microlender Arohan Financial Services recently filed with the Securities Exchange Board of India in preparation for an initial public offering (IPO) through which it seeks to raise INR 8.5 billion (USD 117 million). The organization may shift INR 1.5 billion (USD 20 million) of this amount to a pre-IPO placement round. Meanwhile, early investors in Arohan plan to sell shares in the firm valued at INR 9.5 billion (USD 130 million). These sales would occur via the following entities: Aavishkaar Goodwell India Microfinance Development Company II, Maj Invest Financial Inclusion Fund II, Michael & Susan Dell Foundation, Tano India Private Equity Fund II and TR Capital III Mauritius. The book runners for the issue are Edelweiss Financial Services, ICICI Securities, Nomura Financial Advisory and Securities (India) and SBI Capital Markets Limited.

Arohan was established in 2006 and is a member of the Aavishkaar-Intellecap Group. Its main products are loans for trading, services, sanitation and utilities. Most of these loan products carry terms of one year to two years, have interest rates around 21 percent and are sized from INR 10,000 (USD 140) to INR 50,000 (USD 700). Arohan’s other loans are for solar products, telephones, bicycles, and small and medium-sized enterprises. The microlender also offers life insurance, e-commerce support and financial literacy training. As of March 2020, Arohan reported a gross loan portfolio of INR 49 billion (USD 667 million) and approximately 2.3 million customers served through 711 branches in 229 districts of India.

The members of the Aavishkaar-Intellecap Group include “equity funds, a venture debt vehicle [and] a microfinance and advisory business including investment banking.” Its Aavishkaar Capital manages assets valued at approximately USD 500 million as of 2020. These assets span Africa and Asia in sectors such as financial inclusion and agriculture.

By Aakansha Shenoy, Research Associate

Sources and Additional Resources

VCCircle article
https://www.vccircle.com/aavishkaar-group-promoted-arohan-financial-files-for-ipo

Arohan Financial Services homepage
https://www.arohan.in/

Aavishkar Group homepage
https://www.aavishkaarcapital.in/

Intellecap Group description
https://www.intellecap.com/group/

Aavishkaar Goodwell India Microfinance Development Company II
https://www.goodwell.nl/fund/agimdc-ii/

Maj Invest Financial Inclusion Fund II
https://majinvest.com/en/about-financial-inclusion/

Michael & Susan Dell Foundation
https://www.dell.org/

Tano India Private Equity Fund II
http://www.tanocapital.com/india

TR Capital III Mauritius
https://www.tr-capital.com/main.php?lang=en

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