NBFC-MFI Arohan Financial Services plans to launch an Initial Public Offering worth ₹1,500 crore during the second quarter of the next financial year, according to Managing Director Manoj Kumar Nambiar. The company has already appointed merchant bankers and aims to file the draft red herring prospectus (DRHP) with SEBI by early March 2026, representing an accelerated timeline from the previously indicated two-month window. The IPO will comprise ₹750 crore through fresh share issuance and ₹750 crore via offer for sale by existing investors including Tano Capital and Michael and Susan Dell Foundation, with no stake sale planned by promoters.
The IPO will help strengthen the capital base of the MFI and build the foundation of efficient management and credible board governance. Nambiar indicated that the government is expected to introduce a credit guarantee scheme, which would make banks more comfortable extending credit to the MFI sector. He also highlighted that credit bureaus need to update borrower data at quicker intervals to facilitate better lending decisions. The capital infusion will support the company's expansion plans and product diversification strategy, enabling Arohan Financial Services to tap into new market segments while reducing dependency on unsecured microfinance lending.
By the end of the current financial year, Arohan Financial Services is targeting an outstanding portfolio of ₹7,000 crore, which is projected to reach ₹20,000 crore by 2030. The company's current network stands at ₹2,100 crore. Nambiar noted that the MFI industry has experienced a decline in total outstanding and number of borrowers, but expects this trend to reverse in coming quarters, supported by improving market conditions and policy initiatives. Despite recent industry challenges including decreased total outstanding amounts and borrower numbers, the managing director expressed confidence in the sector's recovery trajectory.
The company maintains a collection efficiency ratio (CER) of 99.70%, reflecting robust recovery mechanisms and borrower quality. Nambiar reported that the MFI sector has shown positive momentum over the last three to four months, with CER increasing following good harvest and GST rates rationalization. Arohan Financial Services is utilizing AI tools for collections and recoveries to enhance operational efficiency, positioning the company competitively within the evolving microfinance landscape. The technological adoption has strengthened the company's recovery processes and operational metrics in the current market environment.
As part of its growth strategy, Arohan Financial Services plans to diversify into secured lending products including gold loans and loans against property. This diversification move comes as the company prepares for its capital market debut and aims to expand its product portfolio beyond traditional microfinance offerings. The strategic expansion will enable the company to tap into new market segments while reducing dependency on unsecured microfinance lending, supporting the ambitious growth targets leading up to the planned IPO launch.
