InvestorQ : Can you tell me your view of the proposed Arohan Financial Services IPO?
Arti Chavan made post

Can you tell me your view of the proposed Arohan Financial Services IPO?

Rutuja Nigam answered.
1 year ago

Microfinance institutions or MFIs appear to be the flavour of the season all over again. In the past, most institutional investors have shown a lot of interest in MFI players considering that they addressed the bottom of the pyramid and they also offered a very solid revenue model with low risk of delinquencies.

Arohan Financial Services is an East-based MFI with headquarters in Kolkata. Most of its client base is also based out of the Eastern region. The company is likely to shortly launch an Rs.1500 crore IPO in the Indian markets. Out of the IPO size of Rs.1500 crore, it is expected that Rs.700 crore will be by way of fresh issue and the balance by way of offer for sale or OFS.

The modalities of the IPO are yet to be finalized and the management of the company is currently in talks with potential lead managers. The idea is to get a colour of the market, gauge demand and evaluate various pricing options. The company is already profit making and currently has a yield of over 20% on its small loan book.

Arohan Financial has some marquee investors on its roster and that includes existing investors, Tano Capital and Aavishkar Goodwell. In addition, American billionaires Michael Dell and Susan Dell are also early investors in Arohan. The IPO was scheduled in 2019 but had to be shelved at that point because of market conditions. The IPO is now being planned to hit the market in July or August. Nearly 98% of Arohan’s borrowers are women.