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Northern Arc Investments' Sixth Fund to Make 8-10 Investments, Already Invests in 4

Investment in microfinance, small business loan finance, affordable housing finance, commercial vehicle finance, agri-business finance and corporate finance.

Northern Arc Investments, a subsidiary of Northern Arc Capital has today announced its sixth debt fund – ‘IFMR FImpact Income Builder Fund’. The base size of the fund is INR 150 crore (USD 23 Mn) with a green shoe option to increase it to up to INR 250 crores (USD 38 Mn). The fund will invest in sectors like microfinance, small business loan finance, affordable housing finance, commercial vehicle finance, agri-business finance and corporate finance. It will seek commitments from domestic investors such as private wealth investors (HNIs) and leading corporates. Till date, Northern Arc Investments has secured commitments totaling in excess of INR 1,000 crores across all its funds. 

Having already raised INR 110 crores, the sixth fund has already made investments in four corporate finance and microfinance companies namely LEAP India, Satya Microcap, Fusion Microfinance and Chaitanya India Fin Credit. The final close of the fund is expected by the end of first quarter of FY19.

This is a short term diversified debt fund with a 3.5 years tenure that is expected to make a total of 8 to 10 investments during the course of the fund. It will invest an average of INR 20 crores in early to mid stage financial institutions and corporate entities. The funds will have 10% participation from the Northern Arc Group - 5% each in the form of co-investment and first loss support, giving adequate risk protection to other investors. 

Talking about the latest fund, Mr. Ravi Vukkadala, CEO of Northern Investments, said “The IFMR FImpact Income Builder Fund is our first in a series of short terms credit funds targeting to deliver higher risk-adjusted returns to investors. These funds will address market gaps in funding and provide differentiated debt solutions to high-quality companies. We are pleased by the response received for this fund and would like to thank our partners for their support in furthering our pursuit of financial inclusion.”

The fund will draw strong support from its parent company, Northern Arc Capital’s experience in financial inclusion sectors; spanning proprietary lending, investing and structured finance. Northern Arc Capital has already developed stringent underwriting guidelines as well as built significant capital market and credit history for the fund’s target sectors. 

Ms. Kshama Fernandes, CEO of Northern Arc Capital said “In the last 6-7 years, we have played a pivotal role in connecting mainstream capital markets to institutions that are at the forefront of promoting financial inclusion in India. Northern Arc Investments has now crossed the threshold of being a new asset manager with the successful management of five funds. With the launch of the sixth fund, Northern Investments’ assets under management has crossed INR 1,000 crores and going forward, we hope to break newer grounds for investment in India’s financial inclusion sector.”

The launch of the new fund comes close on the heels of Northern Arc Investments being recognised the third time at Asia Asset Management’s Best of the Best Awards for ’Asian Fund Launch of the Year (India)’. Northern Arc Investments has been a winner of Asia Asset Management’s Best of the Best Awards in 2016 and 2014 as well. 

Northern Arc Capital Finance Limited (formerly known as IFMR Capital Finance Limited) is a Non-Banking Finance Company that provides access to debt for under-banked individuals and businesses in India. Through a combination of capital, products and partnerships, Northern Arc and its subsidiaries have created a platform that connects millions of borrowers to mainstream debt investors. As of January 31, 2018 Northern Arc has structured, arranged and invested in over USD 7 billion of financing to institutions enabling 33 million end customers to be served. 

Financial services firm Avendus Capital is also in talks with potential investors to raise a $300-million consumer sector-focused fund. Indian Institute of Management Ahmedabad’s (IIMA’s) centre for innovation, incubation, and entrepreneurship (CIIE) on Monday launched a $25 million ‘Bharat Inclusion Initiative’ that will look to mentor and invest in start-ups in the early stage and seed segment over the next three-four years.

Just yesterday, a state-run Chinese bank has launched the country's first India-dedicated publicly offered investment fund for investing in India. The fund, named the Industrial and Commercial Bank of China (ICBC) Credit Suisse India Market Fund, will "invest in exchange-traded funds listed on more than 20 exchanges in Europe and the US that are based on the Indian market".

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