Arohan Financial Services likely to launch Rs 1,500 crore IPO

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Arohan Financial Services, a part of the Aavishkaar Group, has resumed preparations for initial public offer (IPO) as it aims to tap the equity market buoyancy. The size of the issue could go up to Rs 1,500 crore, including Rs 700 crore of primary issue of shares, investment banking sources said.

The Kolkata-based microfinance institution is, however, keeping other options including a rights issue and private equity investment open. With the economy gaining signs of normalcy, the company sees good demand for credit coming up.

“Arohan is in the market to raise capital for its growth plans… all options including a rights issue, a PE raise and also a potential IPO is being examined by the board,” managing director Manoj Kumar Nambiar told ET.

The firm is currently in talks with a group of investment bankers including SBI Capital Markets, ICICI Securities, Nomura, sources with direct knowledge of the matter said. Individual investment bankers could not be contacted immediately for comments.

The total size of the proposed offer will also likely include Offer for Sale (OFS) through which existing investors of the company can sell their shares.

Tano Capital, Aavishkaar Goodwell, Maj Invest and Michael & Susan Dell Foundation are some of the existing investors. The Dells are looking to offload the holding in Arohan for quite some time.

“The IPO could be launched by July/August as discussions have resumed between the company and investment bankers,” said a senior executive involved in the process.

Earlier in November 2019, Arohan shelved its plan to tap the equity market citing adverse market conditions. The scene has changed now with the broader market index nearing record 50,000 points amid ample liquidity.

At the beginning of the year, Arohan lowered lending rate to 20.10% for its flagship loan suite Saral and other products. The change is likely to have benefited over 2.3 million customers, over 98% of whom are women representing the bottom of the socio-economic pyramid.

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