Northern Arc Capital would continue to be seen as a unique play in the impact lending segment, said Ashish Mehrotra, Managing Director and CEO, on the sidelines of the NBFC’s ongoing initial public offering (IPO). Focused on six specialised areas including small business loans, micro-enterprises loans, consumer loans to the urban poor, vehicle finance for two-wheeler mobility or affordable housing, agri-supply chain and now climate and solar financing, Mehrotra believes that these segments should keep Northern Arc’s portfolio complete in the foreseeable future. He said the company is open to acquisitions and the MSME segment, especially on the secured side, was a big focus area for it. Edited excerpts:
You are among the few lenders in alternate credit and impact investing space which have made it to listing. How would you like to be viewed post IPO?
Northern Arc is a diversified financial services business focused on the high growth sectors, whether it is small business loans, micro-enterprises loans, consumer loans to the urban poor, vehicle finance for two-wheeler mobility or affordable housing, agri-supply chain and now climate and solar financing. We have a very holistic view of the flow of credit. The equivalent size of lending is our placement business and that just shows the power of the franchise. We are able to do so because we have a bespoke proprietary tech platform called Nimbus. We have done close to a trillion out of 1.7 trillion transactions through Nimbus.
What would be the split between retail and wholesale businesses?
About 50-50 and over a period of time, direct-to-customer business will grow.
What would your comfortable scale be like in the next three years in terms of assets under management?
We have been growing at about 30 percent year-on-year. The company has demonstrated strong performance and developed strong expertise, and continues to outperform versus the interested peers in terms of credit. The way to look at Northern Arc is to look at it 15 years ago when we were set up. We provided credit solutions to the underserved, predominantly MFIs. Then we looked at micro enterprises and vehicles. Later we started agri loans and then affordable housing for those customers. Six years ago we started something for the urban poor, which is consumer finance.
Post IPO, what would be the capital adequacy?
Over 24 percent. We have always been ahead on our cap-table requirement.
Any new pockets of business that you would want to look at in FY25?
We have launched climate as a new sector. SEBI approved it from last year. That is the big piece on the fund side. We also do MSME where we have been very active in the last six to seven years. Financing for solar and EV is also ongoing. Essentially, we will use our domain expertise to continue to expand.
With fresh capital coming in, are you open to inorganic options?
We are open to it. We continue to look for like-minded opportunities focused around the sector.
The capital will go partly for acquisitions then?
No, right now there is no specific opportunity, but we are very open to expanding. We love the MSME segment, especially on the secured side. That’s a big focus area for us.
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