Arohan Financial Services gives up IPO plan; to raise Rs 1900 crore through private equity route

12 Jul 2022 , 01:16 PM

Microfinance institution Arohan Financial Services  is in talks with various private equity investors for raising up to Rs 1900 crore. This comes after the company gave up its plan to raise money through the IPO route. The company has cited weak conditions in equity markets for its giving up the IPO plan. 

Microfinance companies give small, unsecured loans to people from poor and weaker economic sections. Since the loans that they give is unsecured and is given  to poor people, the interest rate that is charged is slightly higher than the rates charged by other institutional lenders such as banks. For the same reasons, the default rate on the loans given by microfinance companies is also higher. Gross non-performing asset ratio of Atohan currently stands at around 4.9%. This means that payment defaults have happened on 4.9% of the total loans given by the company. Gross non-performing assets ratio for the entire microfinance sector in India currently is 10.9%.

Investors in Arohan Financial Services include Michael & Susan Dell foundation, Tano Capital etc.