Mumbai: Northern Arc Capital, formerly IFMR Capital, a debt capital platform for financial institutions serving excluded individuals and businesses, has raised ₹910 crore ($130 million) from IIFL Special Opportunities Fund and Standard Chartered Private Equity (SCPE).
Affirma Capital, a newly-formed independent private equity firm to be managed by the SCPE team, also participated in the round, Northern Arc said in a statement on Tuesday.
As per the transaction, early investors Dvara Trust, LeapFrog Investments and Accion will partially sell their stakes in Northern Arc. Axis Capital, Credit Suisse and ICICI Securities were advisors to the transaction.
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, said Northern Arc.
It will enable the firm increase exposure to existing sectors, deepen client relationships and bolster product innovation.
“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,” said Kshama Fernandes, managing director and chief executive officer (CEO), Northern Arc.
Northern Arc will continue to invest in product development and technology, building on its knowledge, geographical reach, field insights, data-analytics and risk-modelling, she added.
Established in 2008, Northern Arc connects non-banking financial companies working among financially excluded households and businesses, such as micro-financiers, affordable housing finance companies and small business financiers, with investors in existing and emerging debt capital markets.
With this round of funding, Northern Arc has raised a total of₹1,400 crore (about $200 million) in equity. “This capital raise transforms our institutional capability to serve our client partners and further the mission of financial inclusion,” said Bama Balakrishnan, chief financial officer, Northern Arc.
Till date, the company has enabled debt financing of around₹70,000 crore for its clients across micro-finance, small businesses, affordable housing, vehicles, agriculture and corporate finance segments. Of the total, 20% has come from its own balance sheet.
“Over the last decade, Northern Arc has created a strong platform, which enables access to debt capital for emerging sectors. With a 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,” said Prashasta Seth, CEO, IIFL AMC.
Northern Arc has over 160 employees in five offices across India. It has structured and executed more than 500 capital market transactions.