India focused micro-finance venture capital fund Lok Capital LLC and Michael & Susan Dell Foundation (MSDF) have announced an investment in Arohan Financial Services Limited, a Kolkata-basede micro-finance institution to provide equity capital and capacity building support.

Promoted in 2006 by MBA graduate and microfinance professional, Shubhankar Sengupta, with incubation support and equity financing from the $23-million equity fund, Bellwether Microfinance Fund,  Arohan aims to provide financial services to the socio-economically disadvantaged segments in a scalable, sustainable manner to enhance the quality of life of its clients, and also deliver returns to its investors.

"A significant impact in the provision of microfinance, especially urban microfinance, would come from new entrants into the microfinance space in India," says Viswanatha Prasad, managing director of Bellwethwer. ''We are delighted that Arohan has earned the confidence of equity investors such as Lok and MSDF in a short period of two years since its inception.''

Currently operating in Kolkata, Arohan plans to expand its operations to other urban centres in eastern India, and diversify its product portfolio.

''The investment by Lok Capital and Michael & Susan Dell Foundation is a big step for Arohan in several ways," says Sengupta. "It represents the confidence that the investor community has developed in us, a start-up microfinance institution run by a very young group of people, focused on the hitherto neglected urban microfinance market.

"It also confirms the faith of the microfinance industry that this business can be financially sustainable, even while meeting the social objective of financial inclusion. Third, of course, the enhanced capital and broad based shareholding that we now have, will help us leverage debt funds in our goal of reaching 400,000 clients by 2011.''

Arohan has acquired a diversified board of institutional investors since its inception two years ago.

Michael and Susan Dell established their foundation in 1999 with an endowment that has grown to more than $1 billion and has to date has committed almost $450 million to assist nonprofit organisations working in major urban communities in the United States and India. 

Geeta Goel who leads the foundation's microfinance programme in India, says, ''We look forward to including Arohan in the strong portfolio of urban, start up microfinance institutions already supported by the Michael & Susan Dell Foundation in India. With a focus on supporting high-calibre microfinance institutions in India's urban communities, we are particularly excited about Arohan's commitment to understand and satisfy client requirements through appropriate product design and high levels of customer service, delivered in a cost-efficient manner.''

Vishal Mehta, managing director of Delhi-based Lok Advisory Services, which advised the Lok Capital Fund on the transaction, "Despite its short operational history, the promoter, Shubhankar Sengupta has already put in place a sound institutional set-up, with a very committed team on the ground.

"In terms of geographical presence, Arohan fits in well our Lok Capital's current portfolio mix and we are keen to support the organisation in expanding its current operations network and product mix to serve the largely underserved urban population of eastern India.''