Northern Arc Investment Managers Pvt. Ltd, the alternative investment arm of non-banking financial company Northern Arc Capital, has marked the first close of its new fund.
The new fund - Northern Arc India Impact Fund – has marked its first close at $23 million (approximately Rs 170.29 crore at current exchange rates), Northern Arc said in a statement.
The fund, which represents the overall Northern Arc platform’s eighth investment vehicle, is looking at a total corpus of $100 million, including a greenshoe option of $50 million.
Investors who helped the fund make the first close include the Partners Group-backed PG Impact Investments, the Netherlands-based Anthos Fund & Asset Management, and the US-based Calvert Impact Capital.
Northern Arc said the fund will have a five-year tenor, and that it is looking to make 15 to 20 investments within the next 18 months. Average ticket sizes for these deals will range between $3 million and $5 million, with a focus on sectors such as microfinance, small business finance, vehicle and agri-business finance.
It will also invest in several types of debt instruments, including senior and subordinated debentures, and commercial papers.
“Risk-adjusted credit spreads in the financial services space are very attractive and we are aiming to invest more than Rs 1,000 crore of long term capital to financial institutions over the near term, especially those focusing on the under-served and under-penetrated segments in India,” Ravi Vukkadala, CEO at Northern Arc Investments, said.
Separately, Anthos Fund managing director Dimple Sahni said the fund would leverage Northern Arc’s networks across several sectors, adding that it would also help the asset management firm achieve its sustainable development goals.
Northern Arc Investment Managers – formerly known as IFMR Investment Managers Pvt. Ltd, currently manages over Rs 1,800 crore across seven debt-focussed alternative investment funds (AIFs). Last month, VCCircle reported that the firm had returned money raised for one of its debt funds to its limited partners with higher-than-expected returns.
Some of the other funds that are managed by Northern Arc Investment Managers include the IFMR FImpact Long Term Multi Asset Class Fund, the IFMR Long Term Credit Fund, and the IFMR FImpact Income Builder Fund.
Its parent has also raised significant sums of capital in recent months. VCCircle in December last year reported that Northern Arc Capital received fresh capital from Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and a couple of other private equity investors.
In March that year, Northern Arc Capital said it secured an investment of Rs 910 crore from a clutch of institutional investors, including IIFL Special Opportunities Fund, Standard Chartered Private Equity and Affirma Capital. That round also involved a partial stake sale by Northern Arc’s early investors Dvara Trust, LeapFrog Investments and Accion.
The NBFC claims to have facilitated over $10 billion in financing to over 200 partner organisations since its inception in 2008.