Arohan Financial IPO

Arohan Financial Services Limited is a leading Non-Banking Financial Company-Microfinance Institution (NBFC-MFI) in India, catering primarily to underserved populations in low-income states. Established in 1991, the company began its microfinance operations in 2006 with a mission to provide financial services to economically weaker sections of society, especially women entrepreneurs and small businesses. Over the years, Arohan has built a strong presence across multiple states, focusing on enhancing financial inclusion through its diverse range of microfinance and credit products.

With a customer-first approach, Arohan aims to bridge the gap between formal financial institutions and low-income individuals who have limited or no access to traditional banking services. The company operates with a vision to empower individuals and uplift communities through financial literacy and accessibility. By offering tailored credit solutions, Arohan plays a crucial role in supporting micro-entrepreneurs, helping them expand their businesses and improve their livelihoods.

Services and Operations

Arohan provides a wide array of financial services to its customers, primarily in semi-urban and rural areas. Its product offerings include:

• Credit Products: Arohan offers income-generating loans to micro and small businesses, helping them with working capital and business expansion. These loans are designed to meet the financial needs of women entrepreneurs, farmers, and self-employed individuals.
• Insurance Products: Understanding the need for financial security, Arohan provides life and health insurance solutions to its customers, ensuring they are protected against unforeseen financial hardships.
• Customized Loan Solutions: The company tailors its lending solutions based on the specific needs of borrowers, ensuring flexibility in repayment and loan structuring.

Arohan has a vast operational footprint across 17 states and serves approximately 2.21 million borrowers, with a significant presence in 12 of the 14 low-income states in India. The company uses a technology-driven approach to expand its reach, ensuring seamless loan processing and customer service.

Market Position and Financial Performance

Arohan has established itself as one of the fastest-growing NBFC-MFIs in India. The company’s financial performance reflects its strong market presence and growth trajectory:

• Gross Loan Portfolio (GLP): ₹7,112 crore as of March 31, 2024.
• Revenue for FY 2022-23: ₹1,069.45 crore.
• Net Profit: ₹70.72 crore in FY 2022-23.
• Assets Under Management (AUM) grew from ₹4,122 crore to ₹5,357 crore, showcasing steady expansion.

The company has consistently expanded its portfolio by focusing on financial inclusion and serving customers in rural and semi-urban regions. Its robust risk management framework, digital innovations, and customer-centric approach have contributed to its consistent growth and profitability.

IPO Details and Objectives

Arohan Financial Services has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise capital through an Initial Public Offering (IPO). The IPO consists of:

• A fresh issue of ₹850 crore to support expansion plans.
• An offer for sale of 27,055,893 equity shares by existing investors.
• The funds raised will be used to strengthen the company’s capital base, reduce debt by repaying borrowings, and support general corporate needs.

Future Growth and Expansion Plans

Arohan Financial Services is committed to expanding its footprint and increasing financial inclusion in underpenetrated regions of India. The company plans to:

• Expand its customer base by reaching new regions and increasing loan disbursements.
• Enhance its digital infrastructure to streamline operations, improve customer experience, and offer seamless digital lending solutions.
• Strengthen partnerships with financial institutions and stakeholders to improve funding capabilities.
• Diversify its product portfolio by introducing new credit products catering to different customer segments.

Arohan’s products are designed to help underserved communities with credit products like income-generating loans and group loans, as well as insurance products such as health, life, and asset protection insurance. For more details, refer to the SEBI filing.