Arohan to file for Rs 1,500 crore IPO by month-end

MUMBAI: Despite the jittery markets, the Kolkata-based microfinance institution (MFI) Arohan Financial Services is set to hit the capital markets with a Rs 1,500-crore issue and will be filing the papers with the regulator Sebi by the end of the month.

Arohan will be the sixth publicly traded MFI in the country after CreditAccess Grameen, Spandana Sphoorty Financial, Satin Creditcare Network, Fusion Finance,and Muthoot Microfin.

Arohan, which is among the top 10 MFIs in terms of market reach and AUM, is looking to strengthen its capital base and support market expansion as the microfinance industry comes out of one of the worst periods in its history.

“We are in the process of preparing the DRHP. We hope to file the document by the end of this month. We hope to complete the listing process in the first quarter of next fiscal,” Manoj Kumar Nambiar, managing director of the company, told TNIE.

He further said the issue will comprise Rs 700-800 crore in fresh issue and the rest will be an offer-for-sale by the external investors. The main promoter Aavishkaar group, which is into impact investing and holds around 25%, will not participate in the OFS.

The company has already appointed merchant bankers, he added.

The Aavishkaar group supports Arohan as a technology-led financial inclusion platform, with investments routed through Aavishkaar Venture Management Services and Intellectual Capital Advisory Services, which collectively own around 25% of the MFI.

The other key investors include the Michael & Susan Dell Foundation, Tano Capital, and ASK Financial Holdings, TIAA-Nuveen, Triodos Bank, Maj Invest, and FMO, Nambiar said.

The MFI expects its assets under management to exceed Rs 7,000 crore this fiscal but expects the loan book to reach about Rs 9,000 crore in the next financial year and the assets to cross Rs 20,000 crore by fiscal 2030, Nambiar said. The MFI closed the fiscal 2025 with a loan portfolio of Rs 6,100 crore.

"Despite the system-wide problem last fiscal, we closed the year with net profit of Rs 109.7 crore down from Rs 313.8 crore in FY24. Our gross NPAs were contained at 2.85% and net NPA at 0.53%," Nambiar said, adding, "This is the best in the industry as we were by choice degrowing our portfolio."

On the impact of the recent Bihar legislation on the industry, Nambiar said they are studying the Bihar Micro Finance Institutions Bill, 2026.

“We are happy that the Reserve Bank-regulated entities are exempt, except for collection and recovery practices. We are an RBI-regulated entity and remains fully committed to complying with all applicable regulatory requirements. We’ve been active in Bihar (which is not only the largest MFI market but also the most crisis-hit), since 2008, and all our employees remain committed to advancing financial inclusion in a transparent and customer-centric manner,” he said.

Post-Covid, he said the MFI industry grew from Rs 2 trillion to Rs 4.25 trillion, covering about 82 million customers. That growth has also reflected several weaknesses in the system, including KYC issues, quality of credit bureau data, corporate governance issues in individual companies, and credit underwriting policies.

On choosing to degrow the book, Nambiar said, “Pre-Covid, Arohan was the fifth-largest but today we are ninth or tenth. While we are inching forward, and several companies that had grown to Rs 10,000–12,000 crore in portfolios have now come down to Rs 5,000–6,000 crore now. A lot of these companies, including listed ones, are showing negative P&L, with provisions, write-offs and losses being declared quarter after quarter. But we did not face any such issues.”

According to the latest quarterly report by the industry lobby MFIN, the loan book declined by 18.3% to Rs 3,14,728 crore in the December quarter from the year-ago period but on a sequential basis the decline was only 7.3%, indicating the industry is getting out of the woods as slippages have coming down on a month-on-month basis. Arohan is better than the market in terms of slippage retention and collection efficiency.

As of December 2025, MFIs are the largest provider of micro-credit with a loan amount outstanding of Rs 1,32,418 crore, accounting for 42.1% to total industry portfolio. In Q3 total disbursements rose to Rs 60,350 crore from Rs 56,677 crore in Q2.