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IPO-bound Northern Arc Capital raises $50 mn from JICA
Photo Credit: VCCircle

Digital debt financing platform Northern Arc Capital on Tuesday said it has concluded a $50 million external commercial borrowing (ECB) transaction with the Japanese International Cooperation Agency (JICA).  

The IPO-bound firm will use the funds to cater to credit demands of women borrowers or funding products that disproportionately benefit women, the non-banking finance company (NBFC) said in a statement.  

“We expect more Indian women to have access to financial services through this partnership with Northern Arc. Besides, we are delighted that this loan is our first co-financing with USDFC in India,” Keiichiro Nakazawa, senior vice president of JICA, said in a statement.  

JICA is Japan’s governmental agency that works towards promoting economic and social growth in developing countries.

Northern Arc Capital (formerly known as IFMR Capital Finance) is a digital debt platform that caters to the under-banked in the Indian financial services sector set up primarily to provide access to debt capital to meet diverse credit requirements of under-served households and businesses.   

The Chennai-based lender had filed its Draft Red Herring Prospectus (DRHP) with the market regulator SEBI to raise funds through initial public offering (IPO). 

The company will issue fresh equity shares of up to Rs 300 crore and an offer for sale (OFS) of up to 36.52 million equity shares by existing shareholders and promoters.

The debt financing platform has remained active in the space. This month Northern Arc financed BharatPe for Rs 200 crore ($27 million) in its seventh round of debt financing.  

In June, it had launched an alternative investment platform AltiFi for individual investors.   

In July, Northern Arc Capital and other lenders invested Rs 75.5 crore (around $10 million) debt funding in credit and payment startup Slice.  

In April, it raised debt capital from mid-sized private-sector lender Kotak Mahindra Bank to support pandemic-hit micro-entrepreneurs and micro, small and medium enterprises (MSMEs). 

As of March 2021, its capital to risks weighted asset ratio was 28.89% of which tier-I capital was 27.62%.

The non-deposit taking NBFC’s total outstanding borrowings were at Rs 3,920.81 crore.   

Over the last year, Northern Arc Capital has attracted debt financing from an array of global development finance institutions (DFIs) and impact investors such as US International Development Finance Corporation, Asian Development Bank, Calvert Impact Capital and FMO. 

Northern Arc’s exposure is spread across 657 districts in 28 states and 7 Union Territories in India, as of March 31, 2021.

It is backed by LeapFrog, IIFL, Accion, Augusta Investments (known as AffirmaCapital), Dvara Trust, Eight Roads and Sumitomo Mitsui Banking Corporation.

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