India: IFC plans to invest up to $20m as debt in Arohan Financial Services

Photo: Reuters

International Financial Corp, a part of the World Bank Group, is planning to invest up to Rs 130 crore ($20 million) as senior debt into microfinance institution Arohan Financial Services Pvt Ltd.

According to a disclosure by IFC, the proposed investment will not only help in the growth of microfinance in India but will also help Arohan expand access to microfinance to borrowers, especially low-income households, who have little or no access to formal sources of financing.

IFC’s investment plan follows TR Capital‘s recent announcement that it had acquired a 10.5 per cent stake in the Kolkata-based firm in a secondaries deal from Aavishkaar Group and Tano India Fund II.

Focused on providing micro-finance solutions and insurance in low-income states in the eastern, north eastern and central parts of the country, Arohan currently manages 435 branches with over 3,000 employees and claims to have 1 million active customers and gross assets under management of approximately Rs 21.71 billion.

As of 31st March 2018, Arohan’s shareholders include Aavishkaar Venture Management Services Pvt Ltd, Intellectual Capital Advisory Services Pvt Ltd, Aavishkaar Goodwell India Microfinance Development Company – II, Tano India Private Equity Fund II, Maj Invest Financial Inclusion Fund II K/S, TR Capital III Mauritius, Michael & Susan Dell Foundation, and others.

Aavishkaar-Goodwell is a fund floated by Aavishkaar Venture Management in which IFC holds a 20 per cent stake.

In May last year, Arohan had raised Rs 155.5 crores ($24 million) to fund its expansion plans. Danish asset management firm Maj Invest put in $15 million while existing investors Tano Capital, Swaminathan Anklesaria Aiyar and other individuals, as well as promoter group, Aavishkaar Venture Management Services, contributed a total of $9 million to the round.

IFC is an active investor in the financial services space in India. It recently proposed to invest $15 million (Rs 100 crore) in Aptus Value Housing Finance India to support financing for the affordable housing segment.

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