Debt Capital Platform Northern Arc Capital Raises Rs 910 Cr from IIFL, SCPE and Affirma
Funds will be used to expand existing business lines, grow footprint across emerging sectors, and invest in product development and technology.
Northern Arc Capital (formerly IFMR Capital), India’s leading debt capital platform for financial institutions serving excluded individuals and businesses, has raised Rs 910 crores (USD 130 million) from IIFL Special Opportunities Fund & its Series managed by IIFL Asset Management Limited, SCPE (Standard Chartered Private Equity) and Affirma Capital, a newly formed, independent private equity firm to be managed by the team at SCPE. This investment almost doubles the net worth of the company. With this round of funding, the total equity raised by Northern Arc stands at Rs 1,400 crore (USD 200 million). As part of this transaction, early investors Dvara Trust, LeapFrog Investments and Accion will partially sell their stake in the company, but will however continue to stay significantly invested and remain bullish on the business.Following this investment, Amit Mehta, Principal, IIFL Private Equity will join the board of the company. Axis Capital, Credit Suisse and ICICI Securities acted as advisors to the transaction.
Over the last decade, Northern Arc has played a pivotal role in creating access to capital markets for its clients basis their deep understanding of underlying sectors and businesses, and their ability to distinguish between real and perceived risk. The fresh round of investment will help the company address the debt needs of a growing client base across sectors, including new-age financial institutions in sectors such as consumer finance and fintech. It will enable the firm to increase exposure to existing sectors, deepen client relationships and bolster product innovation. The transaction comes at an opportune time for Northern Arc and its clients, including the many NBFCs working at furthering financial inclusion.
Northern Arc Capital has been instrumental in enabling financial inclusion in India by providing entities that target low-income households and small businesses with critical access to debt capital markets. Till date, the company has enabled debt financing of around INR 70,000 crore for its clients across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance and corporate finance. Over 125 reputed investors (banks, asset managers, insurance companies, DFIs, private wealth etc.) have invested in transactions structured and arranged by Northern Arc Capital. The innovative financial structures designed by Northern Arc Capital have been a fulcrum in building institutional investors’ confidence and fueling their appetite to invest. Over the last year, the Company has introduced innovative new products in the market including Persistent Securitization (Persec) and Covered Bond.
Kshama Fernandes, Managing Director, and CEO, Northern Arc Capital said, “This is a significant milestone for Northern Arc and testament to the confidence placed by investors in the Company. The capital will allow us to significantly scale-up the existing business and pursue new opportunities. We will continue to invest in product development and technology, building on our knowledge, geographical reach, field insights, data-analytics and risk-modelling. We are pleased to have IIFL and Affirma join us in the mission of making access to finance a reality for millions of individuals, low-income households and small enterprises in India.”
Bama Balakrishnan, CFO, Northern Arc Capital, said, “This capital raise transforms our institutional capability to serve our client partners and further the mission of financial inclusion. With a decade of consistent performance and demonstrated ability to scale, we are now poised for growth to the next level.”
Prashasta Seth, CEO, IIFL AMC, said, “Over the last decade, Northern Arc has created a strong platform, which enables access to debt capital for emerging sectors. With strong tailwind from these emerging sectors and Northern Arc’s continued focus on execution, we believe the Company is poised for rapid growth. We are indeed privileged to partner with them at this inflection point.”
Vijay Chakravarthi, Executive Director, SCPE and SCPE’s nominee on the Board of Northern Arc said ‘’Since our investment in 2016, Northern Arc has scaled up across multiple asset classes and outperformed the industry by successfully navigating through multiple market related shocks. We are excited to continue to support the Northern Arc through its next phase of growth as the Company evolves into a unique diversified financial services platform. “
Northern Arc Capital has over 160 employees in five offices across the country. Over a decade, the company has partnered with 180 plus clients to impact the lives of over 33 million customers across 580 districts of India. It has structured and executed over 500 capital markets transactions.
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