Northern Arc secures $80m funding from IFC

• The investment comprises an equal split of equity and debt, each contributing around $40m.

Financial services platform Northern Arc has secured an $80 million in funding from the International Finance Corporation (IFC), a member of the World Bank Group.

“The investment marks the beginning of a long-term relationship with IFC and other multi-laterals who believe in the India story and Northern Arc playing an instrumental role in India’s growth story through financial inclusion,” Ashish Mehrotra, MD and CEO of Northern Arc, said in a statement.

The Chennai-based company said that the new funding from IFC will support the expansion of Northern Arc’s reach to end customers, fostering social impact through improved credit access to customers across its focused sectors.

“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 through innovative products,” said Wendy Werner, IFC India Country Head.

The investment comprises an equal split of equity and debt, each contributing around $40 million, demonstrating IFC’s confidence in Northern Arc’s scalable and sustainable business model and India’s expanding credit market, the company said.

As of September 30, 2023, Northern Arc has facilitated financing of over Rs1.5 trillion in credit through its technology platform using data insights derived from a large data repository and domain expertise, underscoring its role in the financial ecosystem.

Northern Arc handles assets under management of Rs10,081 crore. The firm is backed by equity investors including Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE (formerly known as IIFL), Accion, Augusta Investments (known as Affirma Capital), Dvara Trust, and Eight Roads (a proprietary arm of Fidelity). Northern Arc Capital submitted preliminary papers to SEBI for an initial public offering in February.

The IPO will consist of fresh equity shares valued at Rs500 crore and an offer for sale of up to 2.1 crore equity shares by investor shareholders.