Microfinance institution Arohan Financial Services Ltd is in talks with private equity funds to raise capital to support its growth plans, chief executive Manoj Kumar Nambiar said. Promoted by Aavishkaar Group, the Kolkata-based MFI is targeting Rs 7,000 crore as funds under management for the current financial year, including debt and equity, he said.

“We are currently in talks with a few overseas private equity funds to raise funds after our IPO plans were abandoned. There is enough potential to tap into the resource market, and the RBI guidelines are supportive of the operation of MFIs, the most important being the deregulation of loan pricing,” Nambiar told PTI.

The MFI is keen to allow some existing investors to exit, as well as raise funds through the issuance of new shares.

Nambiar said AFS plans to raise Rs 1,800 crore, of which Rs 1,000 crore through the issuance of new shares and the balance allowing existing investors to exit.

He said that after finalizing the deal with PE funds, three existing investors will exit and the deal is expected to be finalized by September.

The company will attempt another IPO after two or three years, he said.

With a net worth of around Rs 1,023 crore as of March 2022, AFS aims to support 20 million families by 2025, Nambiar said.

After the deal, the net worth will increase by another Rs 1,000 crore.

In February, AFS had filed a DRHP with SEBI for the IPO, which was valid until April 2022.

“The main reasons for scrapping IPO plans were the second and third waves of the COVID-19 pandemic and the ensuing Russian-Ukrainian conflict, which led to market volatility as investors have decided to withhold their investments,” Nambiar said.