The MD of Arohan Financial Services is in talks with PE funds to raise capital

20 Jun 2022 , 02:44 PM

Arohan Financial Services Ltd, a microfinance organization, is in negotiations with private equity groups to seek financing to assist its expansion objectives, according to Managing Director Manoj Kumar Nambiar. The Kolkata-based MFI, which is promoted by the Aavishkaar Group, is aiming for Rs 7,000 crore in funds under management this fiscal, encompassing both loan and equity, he added.

The Kolkata-based MFI, which is promoted by the Aavishkaar Group, is aiming for Rs 7,000 crore in funds under management this fiscal, encompassing both loan and equity, he added.

“After our IPO preparations were delayed, we are presently in negotiations with a few overseas PE companies to obtain capital.” According to Nambiar, there is a considerable opportunity to tap the market for resources, and the RBI rules are favorable for MFIs’ operations, the most notable of which is the deregulation of loan pricing.

The MFI is eager to allow some existing investors to depart as well as generate capital through the issuance of new shares.

Nambiar stated that AFS intends to raise Rs 1,800 crore, of which Rs 1,000 crore would be raised through the issuance of new shares and the rest will be used to exit current investors. Three existing investors will quit when the agreement with the PE funds is finalized, he added, and the transaction is likely to be completed by September.

After two to three years, the company will try again for an IPO, he added. AFS plans to help 20 million households by 2025, with a net worth of roughly Rs 1,023 crore as of March 2022, according to Nambiar.

AFS plans to help 20 million households by 2025, with a net worth of roughly Rs 1,023 crore as of March 2022, according to Nambiar. The transaction would enhance the company’s net value by Rs 1,000 crore. AFS filed a DRHP for an IPO with SEBI in February, with a validity date of April 2022.

“The primary reasons for abandoning the IPO preparations were the second and third waves of the COVID-19 epidemic, as well as the ensuing Russia-Ukraine crisis, which caused market instability and investors to hold off on their investments,” according to Nambiar.