Microfinance institution Arohan Financial Services has filed preliminary papers with market regulator Sebi to raise funds through an initial public offering (IPO), comprising a fresh issue of shares worth ₹600 crore. According to reports from Reuters, Angel One, and NDTV Profit, the draft red herring prospectus (DRHP) filed with Sebi also includes an offer for sale (OFS) of 4.04 crore shares by existing investors. The proposed offering will include a mix of fresh equity issuance and stake dilution by existing investors, with the company planning to utilise the fresh issue proceeds for strengthening its capital position and supporting future lending growth. The development marks another significant IPO move in India's financial services sector as NBFCs continue exploring capital market opportunities, as reported by Delisted Stocks.
Several prominent existing investors will participate in the offer for sale component, as reported by Reuters, Angel One, and NDTV Profit. US Teachers Insurance and Annuity Association, a retirement financial services firm, Michael & Susan Dell Foundation, Aavishkaar Goodwell India Microfinance Development Company-II Ltd, Tano Capital, TR Capital III Mauritius, and Danish Sustainable Development Goals Investment Fund are among the existing investors offloading shares. Teachers Insurance and Annuity Association plans to sell a significant portion of its stake, while the Michael & Susan Dell Foundation will also participate in the share sale. The proceeds from the fresh issue will be utilized to boost the company's capital base and for general corporate purposes.
Arohan Financial Services operates as a technology-enabled non-banking financial company - microfinance institution (NBFC-MFI) offering income-generating loans and a suite of financial and non-financial products to customers primarily across rural and semi-urban states in India. According to Reuters, Angel One, and NDTV Profit, the company had an assets under management (AUM) of ₹6,308 crore as of December 2025. As a microfinance-focused NBFC, Arohan Financial primarily caters to underserved and low-income borrower segments. The company commenced its business in 2006 with operations in a single location in Kolkata and has gradually expanded its footprint to 1,073 branches across 17 states as of December 2025. Additional capital infusion could help the company expand its loan portfolio and improve capital adequacy levels amid rising credit demand in the retail lending space.
According to NDTV Profit, Arohan Financial Services Managing Director Manoj Kumar Nambiar stated earlier in January that the company is looking to raise ₹1,500 crore through its maiden public offering. This represents a significant increase from the initially proposed ₹600 crore fresh issue, indicating the company's ambitious expansion plans. The enhanced fundraising target reflects the strong market demand and growth prospects in the microfinance sector, positioning Arohan Financial to capitalize on the favorable regulatory environment and continued investor interest in NBFCs.
The IPO filing comes after the Reserve Bank of India withdrew lending-related restrictions imposed earlier on Arohan Financial and certain other NBFCs over concerns linked to pricing practices and elevated lending markups in the sector, as reported by Reuters. For the financial year ended March 2025, the company reported a sharp decline in profitability due to rising operational expenses, although net interest income continued to record growth during the period. The IPO filing follows the successful listings of Aye Finance and Kissht in 2026, as reported by The Economic Times and Outlook Business. DAM Capital Advisors, Motilal Oswal Investment Advisors and SBI Capital Markets are managing the issue, with the filing representing another significant development in the microfinance sector's public market participation.
