Arohan Financial Services Pvt Ltd has received a capital infusion of 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. This is microfinance institution’s first equity infusion after it was acquired by IntelleCash Microfinance Network in September last year.
With the new equity infusion, Arohan’s net worth has jumped to Rs 64 crore.
Arohan plans to expand into contiguous low income states like Uttar Pradesh, Jharkhand, Orissa, Chhattisgarh and Madhya Pradesh among others in the next three years and the infusion enhances its capital base for the next phase of growth.
Since its acquisition, Arohan, which is now part of the Intellecap Group, has seen its portfolio grow from Rs 29 crore to over Rs 140 crore backed with the equity from investors, consolidation, funding from lenders and off-balance sheet transactions.
Manoj Kumar Nambiar, managing director of Arohan, said, “With this additional capital, we would want to scale through both organic and inorganic route and expand into other low income states in central, eastern and northeastern regions of India.”
Sushma Kaushik, senior investment manager at Aavishkaar, said,“Post the regulatory guidelines, consolidation was meant to happen and we believe there is value to be created from this model of inorganic growth. IntelleCash and Arohan were suitable candidates for consolidation and as investors we will continue to support the company in charting this unique growth path.”
In September 2012, IntelleCash and Aavishkaar Goodwell II announced the first formal consolidation in the Indian microfinance sector by together picking up a 75 per cent stake in Arohan. IntelleCash, which invests and incubates pro-poor financial businesses, alone acquired a 56 per cent stake. (SEE: IntelleCash acquires majority stake in Arohan Microfinance).
The investment followed an on-the-ground consolidation with IntelleCash’s retail portfolio being integrated with the Arohan branch network in Bihar.
The MFI, which began its operation in 2006, now has a customer base of over 1.7 lakh poor households in 63 branches across three states of West Bengal, Bihar and Assam.
For economist and columnist Swaminathan Anklesaria Aiyar, who has come in as a new investor in Arohan, this adds to his personal exposure to the MFI space. Other investments by Aiyar include Invest India Micro Pension Services (IIMPS), Satin Creditcare Network and Allahabad-based micro finance institution Sonata Finance Pvt Ltd.
(Edited by Joby Puthuparampil Johnson)