IntelleCash Microfinance Network Company (P) Limited, a subsidiary of the Intellecap group of companies and with sole operations in Bihar, has picked up 56% stake in Arohan Financial Services, a Kolkata-based MFI for an undisclosed sum.
Intellecash has decided to consolidate both the businesses, which would give a larger presence in West Bengal and Assam apart from Bihar with 100,000 customer base of poor households.
The consolidation will enhance the equity base of Arohan (established in 2006) and allow it to expand its retail presence across Bihar, Assam, West Bengal and other low-income states. The process will strengthen the management team at Arohan with Manoj Nambiar, CEO of IntelleCash, joining the board and taking over as the managing director.
Speaking on the consolidation strategy, Manoj Nambiar said, “Intellecash had defined consolidation as a key expansion strategy for its own growth. In Arohan, we found an operationally strong MFI that could be our key vehicle to fulfill our aim of facilitating financial inclusion in low-income states. Our belief is that we can add significant value to an excellent Arohan team led by CEO Shubhankar Sengupta and build a formidable microfinance institution focused on low income states.”
Anurag Agrawal, chief operating officer of Intellecap, said: “We have picked up 56% stake in Arohan. The existing investors in Arohan such as India Financial Inclusion Fund (IFIF) and Michael & Susan Dell Foundation, will continue to hold 10% each. Both the investors of Arohan have also participated in the latest transaction.”
Aavishkaar Goodwell II, a fund that has established several investing paradigms in the Indian micro-finance space, has facilitated the deal and also holds close to 16% stake in the company, while the rest with promoters and other individuals, Agrawal added.
?Arohan, which had a portfolio business of R130 crore a year ago, had lost in its way and the business come down to R40 crore and is a loss-making MFI. While IntelleCash has operations only in Bihar, Arohan has operations in West Bengal, Assam and Bihar. Together, we have 100,000 customers of poor households,” Agrawal said.
“With an infusion of fresh funds into Arohan through this acquisition and the proposed borrowings from banks and institutions, we hope to regain our lost market and expect to end the current financial year with R100 crore business and hope to take it to R1,000 crore business over the next five years.”
