NBFC Arman Financial Services raises up to Rs 57 Cr from SAIF Partners

The fresh round of funds will be deployed to increase the loan book of the company, especially in its Microfinance and the new MSME division

Arman Financial Services Ltd., a Gujarat based non-banking financial company (NBFC), which caters to two-wheeler, MSME, and microfinance lending, has raised an aggregate amount of about Rs 57 crore from a fund managed by SAIF Partners.

The funds were invested by way of subscription to 16,66,667 Compulsorily Convertible Debentures (CCDs) of the company, having face value of Rs 300 per CCD. The CCDs and the accrued unpaid interest will convert into 18,90,417 shares, having a conversion price of Rs 300 per share, within 18 months for an aggregate investment up to Rs 56.71 crore, net of taxes on a fully diluted basis.

The fresh raise will be deployed to increase the loan book of the company, especially in its microfinance and the new MSME division, to maintain sufficient capital to meet RBI’s Capital Adequacy norms, and to fund its regional expansion and product diversification initiatives. Currently, the company’s consolidated loan book stands at approximately Rs 425 crore, with a presence in five states, a network of 122 branches, and an employee strength of over 1,000.

Aalok Patel, Executive Director, Arman Financial Services Ltd., said, “In the forefront of the financial inclusion space, we are extremely enthusiastic about the future of the microfinance and micro-enterprise lending businesses in our country. To sustain catering to this niche audience, we have established a commercially and socially viable model that will make rural lending optimised and convenient for all.”

Commenting on the investment, Mridul Arora, Managing Director at SAIF Partners said, “Under the terrific leadership of Arman’s management, the company has created a robust business with strong growth prospects. We are excited about partnering with the Arman team to build upon and further strengthen this solid foundation.”

By offering great quality rural and social impact services, Arman Financial emphasises on delivering high commercial returns with a controlled growth strategy. Their business model is characterised by close customer interaction and relationships with a deep understanding of customer needs. With an expert understanding of local insights, they have been able to bring in higher operating efficiencies within the financial inclusion space.