Danish fund invests $24m in India's Arohan Financial
Indian microfinancier Arohan Financial Services has received DKK 166m (USD 24.3m) from the government of Denmark’s Investment Fund for Developing Countries (IFU).
This is the largest single investment in Arohan to date, according to AVCJ Research, bringing total funding to more than USD 126m.
It follows an approximately USD 18m round in 2019 featuring Danish private equity firm Maj Invest and TR Capital, a USD 19.4m investment from International Finance Corporation in 2018, and a USD 16m investment from TR also in 2018.
IFU said it was investing on behalf of the Danish SDG Investment Fund, a DKK 5bn vehicle dedicated to realising the UN’s 17 sustainable development goals (SDGs) that is backed by large Danish pension funds and private investors.
IFU identified fellow development finance institution FMO of the Netherlands and Nuveen, the impact unit of Teachers Insurance & Annuity Association of America (TIAA) as co-investors. FMO committed INR 910.4m (USD 11m) to Arohan in March. This coincided with reports in local media of a INR 7.3bn round featuring FMO, Nuveen, and Piramal Alternatives.
The capital will be used to expand the company’s footprint and increase its impact by reaching out to poor and vulnerable clients with no previous access to credit, according to a statement. There will also be efforts to develop a climate strategy, including initiatives related to water access and sanitation, home light appliances, and insurance.
Arohan offers a range of loans via an app-based service. Its core product is a loan of INR 10,000 to INR 75,000 with a term of 24-30 months. for women in low-income regions. As of March last year, the company had 1.9m customers across 14 states and a gross loan portfolio of INR 41.2bn serviced by 740 branch locations in 11 states.
The company filed for a domestic IPO in February 2021 with plans to issue INR 8.5bn in new shares, providing exits for several investors. However, the company allowed IPO ticket validity to expire in April the following year without pursuing the listing, citing poor market conditions and options to bolster its capital position with existing backers.
Arohan is part of Aavishkaar Group, one of India’s largest non-bank financial companies, whose VC unit, Aavishkaar Capital, has historically been the largest shareholder. Other investors include Michael & Susan Dell foundation, Tano Capital, Lok Capital, Caspian Capital Partners, and IntelleCash Microfinance Network.
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