MOSCOW, September 28 (Sputnik), Thanasis Petras - Arifmetika, one of the largest microfinance companies in Russia, told Sputnik that its recent agreement with a capital pool company (CPC) in Canada will pave the way to going public on the TSX Venture Exchange (TSXV) and thereby becoming one of the few Russian companies entering a Western stock market in recent years and the first Russian microfinance company to enter the Canadian Venture Stock Exchange. Microfinance is an industry in which financial institutions provide microcredit, other financial products, and banking services to individuals and small businesses looking for smaller amounts in a faster and usually more efficient way compared to conventional banking institutions. Arifmetika is a subsidiary of OR GROUP, a company created in 2003 by entrepreneur Anton Titov, who scaled up the venture from a small regional retail chain of six stores to a nationwide business presence. The Group went public in Moscow's stock exchange in 2017, raising 5.9 billion rubles ($90 million) on its initial public offering (IPO). Apart from microfinance, OR GROUP operates in the Russian footwear market, producing and distributing products through its retail network. The group reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of 2.3 billion rubles ($31.5 million) in 2020. "It is the first time a Russian microfinance / fintech company has entered TSXV," Titov, OR GROUP's CEO, told Sputnik. TSXV AND ARIFMETIKA Canada is implementing a different method for private companies to raise venture capital by entering the stock market and going public in an earlier stage of their development. Instead of working with venture capital firms and raising funds before going for an IPO, private companies in Canada can merge with a CPC to raise capital and go public on TSXV. The CPCs are already listed entities with no commercial activity prior to their IPO, acting as launching platforms for promising private companies to merge and go public more easily. The TSXV stock market is mainly for emerging companies and it is owned and operated by the TMX Group, the owner of Toronto Stock Exchange (TSX), the eighth largest stock market in the world. 

Arifmetika is set to merge with Navigator Acquisition Corp., a Canadian CPC listed in 

TSXV, with the parent company OR GROUP maintaining a majority stake in the new entity. "There are several reasons that we choose TSX — first of all, Canadians are very familiar with the financial sector and financial services companies, and it's easier for us to go public in a stock exchange where there are similar companies. And another reason is that Arifmetika is not such a big company and TSX is familiar with middle and small-capitalization companies," Titov said. The CEO of OR GROUP said that the area of cash loans is growing as a result, and in order to provide the company with additional development opportunities, they've decided to pursue a proposed merger of Arifmetika with the Canadian CPC. "We are also looking to develop neighboring markets, first of all, the Commonwealth of Independent States [CIS] countries — it's a new market but it's growing, and another target is to consolidate the Russian market because there are many microfinance companies and we are the third-largest company in the Russian Federation," Titov said. Apart from the CIS countries, expansion toward the West is also under consideration, as the main requirement for expansion is the existence of banking regulations in the microfinance sector, and in Canada such a framework exists, the executive added. MICROFINANCE SECTOR BOOM The microfinance industry has been growing in recent years, especially in the emerging markets of developing countries. The Russian microfinance market is one of the most promising with growing customer demand, an increased number of high-tech solutions, and the implementation of new services. The market is expected to grow by 30% in 2021, OR GROUP's CEO added. At the same time, proper regulation in Russia has also helped stabilize the market, Titov said. "Now it's a normal part of the financial market and many people use loans from microfinance companies just for some small private needs, and they don't want to go to the bank to apply for credit and spend a lot of time; there are some microfinance companies that can do it faster and easier. It has become just a normal business and that's one of the reasons why the business is growing now," he said.