In what can be seen as the first consolidation move in the Rs 20,000 crore-plus micro finance industry, IntelleCash Microfinance Network Company (P) Limited, an arm of the Intellecap group of companies, has bought 60 per cent stakes in the Kolkata-headquartered MFI Arohan Financial Services. The unique series of back-to-back transactions in IntelleCash and Arohan amounted to over Rs 52 crore and was facilitated by Aavishkaar Goodwell II, a fund that invests in entrepreneurial microfinance and financial inclusion businesses in India.
The MFI entity will continue to be called Arohan and the headquarters will remain in Kolkata. However, Manoj Nambiar, managing director and CEO of IntelleCash, will join the board of Arohan and will take over as the new managing director.
Confirming the developments, Shubhankar Sengupta, who will continue to be the CEO of Arohan and continue to spearhead its operations, said, “We stand to gain considerably through this consolidation move in terms of equity, money and much more. This transaction not only gives the company a strong equity base much needed for our future growth, but also deepens our management capacity. Post consolidation we will have a strong equity base and portfolio spread across three states – Bihar, West Bengal and Assam. It is a perfect launch pad to achieve our aim of reaching a portfolio size of Rs 100 crore by March 2013 and working towards crossing Rs 1000 crore over the next 5 years.”
IntelleCash has been providing incubation services to fledgling MFIs globally since 2008 and has also created a retail portfolio of its own across low-income states in India. “We will immediately and readily get their clientele, marketing and other network in these low income states. Therefore the spin-off benefits of the consolidation move will be immense. With this expanded equity base, debt will follow,” said Sengupta.
The six-year-old Arohan at present has a customer base of over 100,000 poor households with various innovative financial products to cater to different market segments and customer needs including group loans to women, loans to small vendors, small enterprise loans, distribution of micro-pension products and life insurance distribution.
Nambiar on his parts said, “IntelleCash has 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 fulfil our aim of facilitating financial inclusion in low income states. Our belief is that we can add significant value to an excellent Arohan team and build a formidable microfinance institution focused on low income states.”
IntelleCash at present extends micro loans in Bihar and works with partners like International Finance Corporation to design demand responsive products. Till date, IntelleCash has worked with over 30 MFIs across India, Africa and Sri Lanka, aiding in disbursements of Rs 700 crore to over 700,000 customers.
Source: My Digital FC