Northern Arc Bags INR 229 Cr From Anchor Investors Ahead Of IPO

Non-banking lender Northern Arc Capital has secured INR 229 Cr (around $27.4 Mn) from marquee anchor investors ahead of its initial public offering (IPO), which will open for subscription on Monday (September 16).

Northern Arc allotted 87.02 Lakh equity shares to 15 funds at INR 263 apiece, which is the upper price band of the public offer. This aggregates the transaction size to INR 229 Cr.

SBI General Insurance Company, SBI Life Insurance Company, Reliance General Insurance Company, Kotak Mahindra Life Insurance Company, Goldman Sachs (Singapore) Pte, Societe Generale and Quant Mutual Fund are among the anchor investors.

The INR 777 Cr IPO of the Chennai-based NBFC will open for public subscription on September 16 and conclude on September 19, as per the RHP filing. The price band has been fixed in the range of INR 249 to INR 263 per equity share of the face value of INR 10.

The IPO is a combination of a fresh issue of equity shares valued at INR 500 Cr and an offer for sale (OFS) of up to 10,532,320 equity shares worth INR 277 Cr, at the upper end of the price band, by investor shareholders. This aggregates the issue size to INR 777 Cr. 

Those offering shares through the OFS are Leapfrog Financial Inclusion India (II) Ltd, Accion Africa-Asia Investment Company, Eight Roads Investments Mauritius II Ltd, Sumitomo Mitsui Banking Corporation, 360 ONE Special Opportunities Fund (formerly known as IIFL Special Opportunities Fund), and Dvara Trust.

The non-banking lender plans to deploy the fresh proceeds to meet its future capital requirements towards onward lending.

Founded by Ashish Mehrotra 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. 

Back in February, the company filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). 

This development comes over two months after the startup raised $75 Mn (INR 620 Cr) through non-convertible debentures (NCDs) from Dutch entrepreneurial development bank FMO.

Earlier in April the NBFC 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.