Sep 13 2012

Mumbai-based IntelleCash Microfinance Network, a subsidiary of investment banking services and advisory firm Intellectual Capital Advisory Services (Intellecap), has acquired majority stake in West Bengal-based microlender Arohan Financial Services through a series of transactions for a total Rs 52 crore.

After the acquisition, IntelleCash and for-profit micro venture capital fund Aavishkaar Goodwell together will have a total of 75 per cent stake in Arohan, according to Sushma Kaushik, senior investment manager at Aavishkaar Goodwell.

The acquisition was executed by IntelleCash through a combination of transactions including fresh investment from Aavishkaar Goodwell II of Rs 6.6 crore ($ 1.2 million) and purchase of shares by an existing shareholder Bellwether Microfinance Fund. In this fresh equity infusion existing investors India Financial Inclusion Fund (IFIF) and Michael and Susan Dell invested Rs 3.7 crore.

The board of Arohan will soon be reconstituted with IntelleCash holding 3 board seats. Shubhankar Sengupta, chief executive officer of Arohan, will continue to retain his position while Manoj Nambiar, managing director and CEO of IntelleCash, will join the board and take over as the managing director of Arohan, as per Mint which first the transaction.

This is the first instance of consolidation in the microfinance sector, which faced stress after regulatory flip-flops in some key markets like Andhra Pradesh.