Invests Rs 15 crore with a premium of about 100% over current share price.
Belgium-based private equity player Incofin has picked up about 25 per cent stake in Arman Financial Services Ltd, a micro finance institution (MFI) and non-banking finance company (NBFC) for a consideration of Rs 15 crore (approx. US $ 3 million).
The board of directors of Ahmedabad-based Arman has approved preferential share allotment to Incofin, which took the equity stake at Rs 56.95 per share, nearly 100 per cent premium over company's existing share price. Arman, which is listed on the Bombay Stock Exchange, traded at Rs 30.50 per share on November 22, 2011.
Incofin has so far invested about US $ 4 million in two of India's emerging micro finance companies through its Rural Impulse Fund-II, which is a global fund with a fund size of EUR 120 million. The investments in India are the largest exposure for the company under this fund. "In current times, we see good possibility to invest in Gujarat especially in those companies, which provide financial services to the bottom of the pyramid. Our investment in Arman comes with a long term vision of holding period for about 5-8 years," informed Geert Peetermans, chief investment officer, Incofin.
Incofin proposes to subscribe to equity shares of Rs 7.753 crore and the remaining amount as compulsory convertible debentures (CCDs).
"Incofin's investment comes as a boost to our microfinance operations. The company would not only infuse capital but it would bring with itself technical know-how and experience. This becomes a major breakthrough for the company at this crucial time of the MFI industry in India," told Jayendra Patel, vice-chairman and managing director, Arman Financial Services.
Arman, which is a major player having two segments of operations including secured lending for two and three wheeler automobiles and unsecured lending under its micro-financing operations. Commenting on the company's future plans, Patel informed that company would expand its microfinance operations in Saurashtra region, while for the two and three wheeler financing, company eyes eastern region of the state.
The company is also working on plans to enter into value added financial services including full-fledged savings and insurance service.
Arman’s disbursements stood at Rs 61.15 crore for the financial year 2010-11, while in the current fiscal, the disbursements stood at Rs 43.99 crore (for 7-month period).
