IPO-Bound Northern Arc Bags $75 Mn Debt From Dutch FMO

Non-banking lender Northern Arc Capital has raised $75 Mn (INR 620 Cr) through non-convertible debentures (NCDs) from Dutch entrepreneurial development bank FMO.

The Chennai-based fintech platform said in a statement that the debentures will be listed on the BSE for a tenure of five years. It also plans to deploy the fresh proceeds to fuel its retail microloans, MSME loans and green loans. 

“By channelling these funds into microloans, SMEs, and green projects, we aim to create a cascading effect that promotes sustainable economic growth and financial inclusion. Our innovative platforms, such as nPOS and Nimbus, play a crucial role in this mission by ensuring seamless loan processing and effective debt management,” said Northern Arc’s managing director and CEO Ashish Mehrotra. 

nPOS and Nimbus constitute Northern Arc’s tech and analytics offerings. While the former is a cloud-based API-enabled platform that streamlines loan processes for partnership and co-lending businesses, Nimbus provides comprehensive end-to-end debt transaction management. 

Founded in 2009, Northern Arc provides credit facilities to MSMEs, Indian households, financial institutions and emerging businesses, including startups. It has backed startups like Rebel Foods, ProsParity, slice, BharatPe, among others. 

It claims to have financed INR 1.5 Tn since inception across India and handles an AUM of over INR 10,081 Cr.

The company’s total revenue for financial year 2023-24 (FY24) stood at INR 1,890 Cr, a 44% increase from INR 1,304 Cr in the previous fiscal year. It reported a profit of INR 317.69 Cr for the fiscal. 

The Dutch investor first backed Northern Arc back in 2022 with an investment of $50 Mn. 

“This local currency facility to Northern Arc, supports entrepreneurship and innovation and encourages the formalisation and growth of SMEs and microenterprises,” Northern Arc’ CIO Huib-Jan de Ruijter said.

Besides FMO, the firm counts the likes of Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE, Accion, Augusta Investments, among others, as its backers. 

The development comes precisely two months after the NBFC announced the raise of $80 Mn from International Finance Corporation (IFC). Back then, it had expansion plans on its mind.

The debt raise comes at a time when Northern Arc is gearing up for public listing. Back in February, the company had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). Its IPO will comprise INR 500 Cr fresh issued shares along with an offer for sale (OFS) component of 2.1 equity shares.