Arohan Financial Services Targets ₹1,400 Crore IPO With ₹600 Crore Fresh Issue

Microfinance lender Arohan Financial Services plans to file draft papers for a ₹1,400-crore initial public offering (IPO) within a month, managing director Manoj Nambiar said. The company has revised the structure of the issue to a ₹600-crore primary raise and an ₹800-crore offer for sale (OFS).

This is lower than the ₹1,500-crore plan announced earlier this year, which had an equal split between a fresh issue and an OFS. The change comes after a sharp correction in equity markets following geopolitical tensions, which prompted the company to scale back its plans.

Promoters To Hold Stake, Investors Eye Exit

Aavishkaar and Intellecap, classified as the promoter group, together hold a 14.2% stake and will not sell shares in the IPO. Instead, long-time investors such as the Michael & Susan Dell Foundation and Tano Capital are expected to pare their holdings through the OFS route.

Nambiar said the company aims to keep its filing ready so it can tap the market when conditions stabilise. The approval process typically takes three to four months, with a 12-month window available for listing after clearance.

Financial Position And Asset Quality Improve

The company will base its draft red herring prospectus (DRHP) on its December 2025 financials. At that point, assets under management stood at ₹6,300 crore. Nearly half of this portfolio came from Bihar, Uttar Pradesh and West Bengal.

Asset quality has improved over the past year. The gross non-performing assets ratio declined to 1.6% from 2.9% a year ago, reflecting better collections and tighter underwriting.

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Delayed Listing Plans Amid Past Sector Stress

Arohan has been working towards a stock market debut for several years now. The company had secured the regulator’s nod in 2021 but chose not to go ahead at the time, as conditions in the microfinance space remained unsettled.

Back-to-back disruptions across the industry forced many lenders, including Arohan, to put fundraising plans on hold. However, recent data points to some stabilisation. The overall microfinance loan book grew 2.5% from the previous month to ₹3.29 lakh crore at the end of February.

This comes after a long stretch where lenders had slowed fresh lending due to rising concerns over borrower leverage. The industry’s outstanding portfolio had earlier touched ₹4.43 lakh crore in March 2024 before seeing a decline.

Sources:

The Economic Times

India IPO