Northern Arc Capital raises $50 million via NCDs from Dutch bank FMO

IPO-bound debt financier Northern Arc Capital has raised $50 million through non-convertible debentures (NCDs) from the Dutch entrepreneurial development bank FMO.

Northern Arc will use half the proceeds to serve MSMEs and women entrepreneurs, the debt firm said in a media statement on October 27.

“The long-term nature of the facility will help Northern Arc provide customized credit solutions to the customers both directly and through partners,” the statement added.

The use of proceeds will address three critical UN Sustainable Development Goals: SDG 8 (Decent Work and Economic Growth), SDG 5 (Gender Equality), and SDG 10 (Reduced Inequality), it further noted.

“Our diligence frameworks and processes, underpinned by technology and data science, are trusted by some of the world’s most seasoned investors and have been validated by a decade-long track record.  We are excited to expand this partnership with FMO to cater to the diverse financial requirements of India’s small entrepreneurs and emerging segments,” said Ashish Mehrotra, managing director and chief executive of Northern Arc Capital.

Founded in 2009, Chennai-headquartered Northern Arc is a diversified financial services platform that provides credit to MSMEs, households, financial institutions, and emerging businesses.

As per the statement, the financial services platform has disbursed over 5 million loans across business and personal categories.

The firm had filed draft documents with the capital markets regulator Sebi last year to raise funds via an initial public offering of more than Rs 300 crore. The IPO comprises a fresh issue of Rs 300 crore and an offer for the sale of up to 3,65,20,585 equity shares by the shareholders.

Northern Arc reported a near twofold increase in net profit at Rs 163.73 crore in FY22, up from Rs 56 crore a year ago. Revenue rose over 34 percent to Rs 867.11 crore in FY22 from Rs 646 crore in FY21.

Over the last three years, Northern Arc has raised funds from a spectrum of reputed international investors including USDFC, ADB, Proparco, Calvert Impact Capital, and JICA.

“Through our latest partnership with Northern Arc, we can therefore support the business development across the Indian country, in line with our updated strategy towards 2030. We look forward to our continued collaboration,” said Huib-Jan de Ruijter, Chief Investment Officer at FMO.