Non-banking lender Northern Arc, which recently refiled its preliminary papers for a public listing, has raised $40 million (Rs 333 crore) in equity and another $40 million in debt from International Finance Corporation (IFC), the private-sector investment arm of the World Bank Group.
VCCircle had reported about Northern Arc’s plan to raise $80 million in February.
The Chennai-based non-banking lender is also looking to raise additional $75 million from another foreign institution, which has also backed it in the past, VCCircle reported earlier this week.
“This investment from IFC is a strong endorsement from a large global multilateral to our mission of enabling credit to the underserved and unserved people in India,” said Ashish Mehrotra, managing director and chief executive of Northern Arc.
Northern Arc said in a statement that it will use the fresh funds for further expansion and improving its reach to end customers.
“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,” said Wendy Werner, IFC India Country Head.
Nothern Arc is a financial inclusion-centric NBFC that derives much of its business from microfinance and MSME finance, though it is also present in areas like affordable housing, vehicle, consumer finance and agriculture supply chain finance.
It has three verticals, including financing from own balance sheet and in the future plans to launch a dedicated rural finance business through its subsidiary Pragati. The company also does syndication and structuring where it works with partners, besides managing debt funds that invest in mid-market companies.
Its total AUM stood at Rs 10,081 crore as of September 2023, having nearly doubled in the last two years.
The firm has raised capital from multiple domestic and global institutions since its inception, when it was known as IFMR Capital Finance. Its list of backers include Global financial impact investor Leapfrog, Accio, 360 ONE (previously IIFL Group), Affirma Capital, Eight Roads.
The Chennai-based company first filed IPO papers with SEBI in July 2021. Despite gaining approval in September, the company had deferred the public issue.
Now, having refiled its papers, the company is looking to raise Rs 500 crore through a fresh issue besides an offer for sale, that is likely going to provide bumper returns to its investors.