AHMEDABAD: Arman Financial Services operates in three major business segments: two-wheeler financing, individual micro-enterprise (MSME) loans, and group-based microfinance loans. The company caters to a niche target audience, including the rural unbanked ecosystem of the country.
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 leading Gujarat based Non-Banking Financial Company (NBFC), which caters to two-wheeler, MSME, and microfinance lending has raised an aggregate amount of Rs 50 crores 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 CCDs. 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 crores, net of taxes on a fully diluted basis.
Focused on disrupting the rural financial inclusion space with a strong risk framework and conservative lending practices, 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 their regional expansion and product diversification. Currently, the company’s consolidated loan book stands at approximately Rs 425 crores, with a presence in 5 states, a network of 122 branches, and an employee strength of over 1000.
Aalok Patel, Executive Director, Arman Financial Services Ltd. said, “To sustain catering to this niche audience, we have established a commercially and socially viable model which will make rural lending optimised and convenient for all.”
He added, “We strongly feel that Arman’s new partnership with SAIF will help us reach the next step in our growth story. SAIF will not only provide the necessary capital to fund our expansion strategy, but also help by bringing in diverse multi-industry knowledge to enable us to implement global best practices and help Arman to better its existing processes, technology, risk, and corporate governance.”
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”
“Apart from equity, SAIF has an impeccable track record of nurturing small companies to become giants in a safe and sustainable way. The expanded capital base will allow Arman to continue growing its loan book, expand geographically, and diversify its product”, said Jayendra Patel, Vice-Chairman & Managing Director, Arman Financial Services Ltd.
By offering quality rural and social impact services, Arman Financial emphasizes on delivering high commercial returns with a controlled growth strategy. Their business model is characterized 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.