Northern Arc Capital Raises ₹910-cr Funding From IIFL

Northern Arc Capital (formerly IFMR Capital), on Tuesday, announced that it has raised ₹910 crore ($130 million) from IIFL Special Opportunities Fund and its series managed by IIFL Asset Management Ltd, SCPE (Standard Chartered Private Equity) and Affirma Capital, a newly-formed, independent private equity firm to be managed by SCPE team.

The current investment almost doubles the net worth of the company, and takes the total equity fund-raising tally of Northern Arc to ₹1,400 crore ($200 million), said a press release from the company.

The current transaction will see early investors such as Dvara Trust, LeapFrog Investments and Accion partially sell their stake in the company, but they will continue to stay significantly invested and remain bullish on the business, the release added.

“The capital will allow us to significantly scale-up the existing business and pursue new opportunities. We will continue to invest in product development and technology, building on our knowledge, geographical reach, field insights, data analytics and risk-modelling,” said Kshama Fernandes, MD and CEO, Northern Arc Capital.

Northern Arc Capital was established in 2008 to enable the flow of debt capital to underserved sectors such as microfinance, small business lending, affordable housing finance, agriculture finance, vehicle finance, and others. The company has raised about ₹70,000 crore ($10 billion) of debt for its clients so far, of which, 20 per cent came from its own balance sheet.

“As we add more and more clients, our portfolio will become more granular and diversified in terms of underlying sectors, products and offerings, diversified geography and besides underlying risks and client diversification,” said Fernandes.

“With strong tailwind from the 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 Asset Management.