Arohan Financial Services Files DRHP, Plans ₹600 Crore Fresh Issue

Microfinance lender Arohan Financial Services has filed its draft red herring prospectus with SEBI for an initial public offering comprising a ₹600 crore fresh issue and an offer for sale of up to 4.04 crore shares by existing investors. The Kolkata-based NBFC-MFI submitted the DRHP on 15 May 2026, according to filings reported by Business Standard and Reuters. This is Arohan's second attempt at listing — the company had received SEBI's go-ahead in 2021 but shelved the issue.

Key IPO Facts

Source: Business Standard / Reuters filing report, 16 May 2026. Indian numbering: 4,04,00,000 shares = 4.04 crore shares.

What the DRHP discloses

The fresh issue proceeds will go towards strengthening Arohan's capital base, according to the company's filing. The OFS portion lets long-standing shareholders pare their stakes, with none of the promoters selling. Aavishkaar and Intellecap, classified together as the promoter group, hold 14.2% combined and will not sell shares through the IPO.

The DRHP has been built on Arohan's December 2025 financials and business numbers, managing director Manoj Nambiar said in an earlier interview to The Economic Times. "The idea is to be ready with a valid ticket when things settle down," Nambiar told ET in April 2026, referring to the company's preparation strategy.

Who is selling in the OFS

Three categories of long-term investors are reducing exposure through the OFS:

• Teachers Insurance and Annuity Association (TIAA) — the US retirement services firm holds a 12.06 per cent stake and is selling about 9.7 million shares.
• Michael & Susan Dell Foundation — holds 2.05% and plans to offload over 8.7 lakh shares.
• Tano Capital — also expected to pare its holdings through the OFS route, per management's earlier disclosures 

The rupee value of the OFS will depend on the final price band, which is yet to be fixed.

How Arohan's business looks today

Arohan operates as an NBFC-MFI focused on rural and semi-urban borrowers across 17 states. Assets under management stood at ₹6,300 crore as of December 2025, with Bihar, Uttar Pradesh and West Bengal together contributing about half of the loan book. The gross non-performing assets ratio declined to 1.6% from 2.9% a year ago, reflecting better collections and tighter underwriting after the microfinance sector's stress through 2024.

The FY25 numbers are weaker. Profit margins narrowed to 6.5% in FY25 from 19.2% in FY24, with net profit falling roughly 65% over the year. Net interest income still grew about 13%, but rising operating costs and credit-cost normalisation dragged the bottom line. The audited statements will be available once SEBI publishes the DRHP on its website.

A second attempt, with smaller size

Arohan has been working on a public listing since 2019. The company had secured the regulator's nod in 2021 but chose not to go ahead at the time, as conditions in the microfinance space remained unsettled. In January 2026, management announced a fresh ₹1,500 crore plan with an equal split between a fresh issue and an OFS. That has now been scaled to a ₹600 crore primary plus an OFS of 4.04 crore shares, a smaller primary raise after the Iran war, which led to a steep fall in the stock market.

DRHP filings from other lenders can be tracked on the upcoming Mainboard IPO pipeline, and the broader Mainboard IPO list offers context on how recent NBFC issues have priced.

In our view, the FY25 profit drop and the OFS-heavy structure will shape investor reception. The recovery in asset quality is real, but the FY25 P&L still carries the cost of the sector's recent stress. Listed peers like CreditAccess Grameen and Fusion Finance are the natural valuation benchmarks once the price band is announced.

FAQs

Q: What is the size of the Arohan Financial Services IPO? A: A ₹600 crore fresh issue plus an offer for sale of up to 4.04 crore shares; the total rupee value will be fixed once the price band is announced.

Q: Who are the selling shareholders in the Arohan IPO? A: TIAA (~97 lakh shares), Michael & Susan Dell Foundation (~8.7 lakh shares), and Tano Capital, among others; the promoter group is not selling.

Q: When will Arohan Financial Services list on NSE and BSE? A: Dates are not yet set — SEBI typically takes three to four months to clear a DRHP before the RHP and subscription window can be fixed.

Final Thought

For a sector still rebuilding investor trust, Arohan's DRHP is a useful test case. The smaller fresh issue and OFS-heavy structure suggest the priority is shareholder liquidity as much as new capital. Long-term investors comparing this with listed MFI peers will weigh whether the eventual valuation reflects both the visible recovery in asset quality and the year of margin compression in FY25.

What's Next

SEBI's review of the DRHP typically takes three to four months. Arohan will then file an RHP with the finalised price band, lot size and subscription dates. The full SEBI-published DRHP — when available on SEBI's public issues page — will carry the audited FY25 financials, BRLM list, registrar name, use-of-proceeds breakdown, and promoter and pre-IPO lock-in details. Track live updates on IPO Guru.