Arohan Financial Services to file draft papers for IPO by March-end: MD

The microfinance lender is targeting an AUM of Rs 9,000 crore in FY27

Kolkata-based Arohan Financial Services is preparing to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) by month-end for an initial public offering (IPO). With the proceeds, Arohan is looking to strengthen its capital base and support expansion, Manoj Kumar Nambiar, managing director (MD), told Business Standard.

 

“We are currently in the process of preparing the DRHP document. We hope to file the document by the end of this month. Then, we will await queries and hopefully get a ticket from Sebi. We are hoping that the next financial year will be a better space to look at the listing,” said Nambiar.

 

The lender expects its assets under management (AUM) to exceed ₹7,000 crore by March-end (FY26). Additionally, it is targeting an AUM of about ₹9,000 crore in the next financial year (FY27). This would be supported by improved productivity across its branch network. 

 

Over the longer term, Arohan aims to build a ₹20,000-crore portfolio by 2030.

 

Growth in AUM is expected to be driven by steady expansion and deeper penetration across existing markets.

 

Arohan currently operates in 17 states with a network of around 1,000 branches.

 

The immediate focus of the lender is on consolidating this footprint and improving branch-level productivity.

 

West Bengal remains the largest contributor to the portfolio, with a share of about 27–28 per cent, followed by Bihar and Assam.

 

In recent years, the lender has expanded into newer geographies such as Gujarat, Maharashtra, Tamil Nadu and Karnataka.

 

Alongside its IPO plans, the lender is looking to diversify beyond its core microfinance business.

 

Changes in regulatory norms have created more room for non-microfinance lending, allowing companies to expand into secured products.

 

Arohan is evaluating new segments such as gold loans, loans against property, vehicle loans, and two-wheeler financing.

 

The lender plans to launch at least one of these verticals in FY27.

 

The strategy will focus on leveraging its existing customer base and field network rather than building a new distribution structure.

 

“This 60-40 change from the Reserve Bank of India (RBI) gives us more space to look at other revenues, including secure products. We have already done a detailed project note on gold loans for our board to consider. We are also looking at other asset classes like loans against property, vehicle loans and two-wheeler loans. We will hopefully launch at least one of those verticals in the next financial year. But the idea is also to use the current network of people,” Nambiar added.

 

The lender is also exploring overseas borrowing options and additional lines of credit from multilateral development banks. 

 

It is in discussions with BlueOrchard and FMO (Dutch Entrepreneurial Development Bank) for additional lines of credit.

 

A few tranches of non-convertible debentures (NCDs) are also in the pipeline, Nambiar added.

 

“As a growing company, we will look at whatever is possible from a borrowing perspective but our focus will be tenure and landed cost of funds. Blue Orchard, Responsibility and FMO are in discussions with us. Some of them have already been lenders. So, this is an additional line that we are looking at,” he said.