NBFC-MFI Arohan Financial Services plans to hit the capital market during the middle of next financial year with an IPO of Rs 1,500 crore, managing director Manoj Kumar Nambiar said.
The company has already appointed merchant bankers and hopes to file the draft red herring prospectus (DRHP) with SEBI in the next two months, he said.
“We plan to hit the capital market to raise Rs 1,500 crore through an IPO in the second quarter of next financial year. Out of the total amount, Rs 750 crore would be raised by issue of fresh shares and Rs 750 crore as offer for sale (OFS) by old investors like Tano Capital and Michael and Susan Dell Foundation”, Nambiar told PTI.
Nambiar said there will be no stake sale by the promoters.
He said that the MFI sector is seeing a positive momentum in the last three to four months, with collection efficiency ratio (CER) increasing following a good harvest and GST rates rationalisation. CER of Arohan stands at 99.7 per cent. Nambiar said Arohan is using AI tools for collections and recoveries.
According to him, the IPO will help strengthen the capital base of the MFI and build the foundation of an efficient management and credible board governance.
Nambiar said that it is expected that the government will come out with a credit guarantee scheme, following which banks will feel more comfortable to give credit to the MFI sector.
“There are some issues which are needed to be resolved for the betterment of the sector. The credit bureaus need to update data on borrowers on quicker intervals, which in turn will help in lending”, he said.
Nambiar said that the MFI industry has seen a dip in total outstanding and the number of borrowers, adding that this trend will be reversed in the coming quarters.
By the end of the current financial year, Arohan is eyeing an outstanding portfolio of Rs 7,000 crore, which is targeted to touch Rs 20,000 crore by 2030. Its network stands at Rs 2,100 crore, he said.
Arohan plans to diversify into secured products like gold loans and loans against property.
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