Arohan Financial Services Files for IPO, Plans ₹600 Crore Fresh Issue

Expert Analysis:

• Arohan Financial Services has filed draft papers for its IPO, comprising a fresh issue of ₹600 crore along with an offer-for-sale of up to 40.4 million shares by existing investors.

• The IPO proceeds from the fresh issue are expected to strengthen the company’s capital base and support future lending growth in the microfinance segment.

• The filing comes after the Reserve Bank of India lifted earlier lending restrictions imposed on select NBFCs over pricing and underwriting concerns, improving operational visibility for the company.

• Existing shareholders including Teachers Insurance and Annuity Association (TIAA) and Michael & Susan Dell Foundation are partially exiting through the OFS component, indicating investor monetisation after years of private market participation.

• Financial performance remains mixed, with FY25 profit declining ~65% due to elevated operating and credit-related expenses, although net interest income still grew nearly 13%, reflecting continued business expansion.

• The IPO timing aligns with improving sentiment in the microfinance sector, where asset quality pressures have started stabilising after a difficult two-year period.

• Arohan’s revised IPO structure of roughly ₹1,400 crore is lower than earlier expectations, suggesting a more conservative capital raising approach amid evolving market conditions and valuation discipline.

• Investor sentiment toward IPOs remains selective in 2026 due to global geopolitical uncertainties, but established financial services businesses with scalable retail lending models continue to attract institutional interest.