IPO-Bound Northern Arc Snags $80 Mn From IFC

Non-banking lender Northern Arc has raised $80 Mn (INR 667 Cr) from World Bank Group’s private-sector investment arm  International Finance Corporation (IFC) in equal halves of equity and debt components.

Northern Arc will use the fresh capital to further its expansion and widen reach to end customers.

Founded in 2009, Northern Arc is a non-banking financial company (NBFC) which aims to offer a suite of retail credit services to under-served households and businesses in India.

Over the years, it has gained expertise in enabling credit across sectors like MSMEs, MFI, consumer financing, vehicle financing, affordable housing financing and agriculture financing.

Its multi-channel approach of lending, placement and fund management is aimed at increasing the supply of credit for customers.

The Chennai-based non-banking lender claims to have facilitated financing of more than INR 1.5 trillion in credit through its technology platform as of September 30, 2023. 

Northern Arc has INR 10,081 Cr worth of assets under management and counts investors like Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE (formerly known as IIFL), Accion, Augusta Investments (known as Affirma Capital), Dvara Trust and Eight Roads (proprietary arm of Fidelity) among its backers.

“The investment marks the beginning of a long-term relationship with IFC and other multi-laterals who believe in the India story and Northern Arc playing an instrumental role in India’s growth story through financial inclusion,” said Ashish Mehrotra, managing director and chief executive of Northern Arc.

“Our partnership with Northern Arc is a key component of our strategy to harness private sector expertise and finance in reaching millions of MSMEs and mid-market companies through innovative products,” IFC India Country Head Wendy Werner said.

The funding comes at a time when Northern Arc is accelerating its initial public offering (IPO) plans. In February, it refiled draft papers with market regulator SEBI for an IPO, with plans to raise funds worth INR 500 Cr through a fresh issue, besides an offer for sale.

In February 2022, Northern Arc secured $50 Mn funding via non-convertible debentures issued by Dutch entrepreneurial development bank FMO, as per Inc42’s report.