Microlender Arohan Financial raises $9.6M from Tano Capital

Kolkata-based microfinance institution Arohan Financial Services has raised Rs 60 crore ($9.6 million) in fresh funding from private equity firm Tano Capital, according to a statement.

The fresh capital infusion by Tano Capital will help the microlender increase its net worth as well as expand operations geographically.

“The enhanced net worth will help us implement our growth plans in the 10 low-income states starting with Odisha in April 2015. We offer a product suite on the credit side, provide insurance and micro-pension products to our clients and will soon start offering liability products as a BC (business correspondent) of partner banks," said Manoj Nambiar, managing director, Arohan.

With a loan portfolio of around $50 million, Arohan currently operates in Bihar, Jharkhand, West Bengal and Assam, catering to the financial needs of over 300,000 customers across 36 districts. The company has a network of over 100 branches.

“Arohan is our first microfinance investment in India and given the demography of India, we believe that financial inclusion will be a big play in the years to come,” Piyush Goenka, investment director, Tano Capital, said.

Arohan had raised Rs 22 crore ($3.5 million) from three investors—existing stakeholders Aavishkaar Goodwell II and Michael & Susan Dell Foundation besides new private investor Swaminathan Anklesaria Aiyar—in late 2013. This was the MFI’s first equity infusion after it was acquired by IntelleCash Microfinance Network in September 2012.

Mumbai-based IntelleCash Microfinance Network is a subsidiary of investment banking services and advisory firm Intellectual Capital Advisory Services (Intellecap).

IntelleCash and Aavishkaar Goodwell II had together picked 75 per cent stake in Arohan with IntelleCash, which invests and incubates pro-poor financial businesses, picking 56 per cent stake. The investment followed an on-the-ground consolidation with IntelleCash’s retail portfolio being integrated with the Arohan’s branch network in Bihar.

In the same space, Bangalore-based Ujjivan Financial Services recently raised $96 million (about Rs 603 crore) in a new round of funding from investors led by CX Partners, CDC, NewQuest Asia Investments and Bajaj Holdings.

(Edited by Joby Puthuparampil Johnson)

Leave Your Comment(s)