Northern Arc Investments floats sixth debt fund to target finance sector

Northern Arc Investments, formerly IFMR Capital, has launched its sixth debt fund with a target corpus of Rs 150 crore or $23 million to invest in the finance sector.

The fund has a green shoe option to increase the fund to Rs 250 crore. The fund will invest in sectors like microfinance, small business loan finance, affordable housing finance, commercial vehicle finance, agri-business finance and corporate finance.

“The IFMR FImpact Income Builder Fund is our first in a series of short-term credit funds targeting to deliver higher risk-adjusted returns to investors. These funds will address market gaps in funding and provide differentiated debt solutions to high-quality companies,” said Ravi Vukkadala, chief executive of Northern Arc Investments.

The firm’s sixth fund is a short-term diversified debt fund with 3.5-year tenure, targeting to make a total of 8 to 10 investments during the course of the fund. It will invest an average of Rs 20 crore in early, to mid-stage, financial institutions and corporate entities. The sixth fund of the Norther Arc Investments, which is a unit of Northern Arc Capital, will see 10% participation from Northern Arc Group – 5% each in the form of co-investment and first loss support.

The firm, having already raised Rs 110 crore for the sixth fund, has made investments in four corporate finance and microfinance companies – LEAP India, Satya Microcap, Fusion Microfinance and Chaitanya India Fin Credit.

It is seeking commitment from domestic investors such as private wealth investors (HNIs) and leading corporate houses to close the fund by the first quarter of FY19. Northern Arc Investments has secured commitments of over Rs 1,000 crore so far, in its previous funds combined.

IFMR Capital rebranded itself as Northern Arc Capital in February this year. Established in 2008, the company connects non-banking financial companies working among financially excluded households and businesses with investors in existing and emerging debt capital markets.

According to reports, Northern Arc Capital is believed to be in the process of setting up its first overseas joint venture, which will allow the company to expand into overseas markets.