Introduction

Northern Arc Capital, a prominent non-banking financial company (NBFC) based in Chennai, has successfully raised INR 229 crore (approximately $27.4 million) from a roster of leading anchor investors. This funding comes ahead of the company’s initial public offering (IPO), which is set to open for public subscription soon.

Anchor Investors and IPO Details

The anchor investors backing Northern Arc Capital include major financial institutions such as SBI General Insurance Company, SBI Life Insurance Company, Reliance General Insurance Company, Kotak Mahindra Life Insurance Company, Goldman Sachs (Singapore) Pte, Societe Generale, and Quant Mutual Fund. This diverse group of investors underscores the confidence in Northern Arc’s business model and growth prospects.

According to a circular released on the BSE’s website, Northern Arc Capital has allocated 8.702 million equity shares at INR 263 per share, which represents the upper end of the price band. This allocation totals INR 229 crore, aligning with the company’s strategic objectives as it prepares for its IPO.

IPO Structure and Pricing

The IPO, scheduled to open on September 16 and close on September 19, is valued at INR 777 crore. It includes a fresh issue of equity shares worth INR 500 crore and an Offer For Sale (OFS) of up to 10,532,320 equity shares, valued at INR 277 crore at the upper end of the price band. The price band for the IPO is set between INR 249 and INR 263 per share.

Notable entities participating in the OFS include Leapfrog Financial Inclusion India (II) Ltd, Accion Africa-Asia Investment Company, Eight Roads Investments Mauritius II Ltd, Sumitomo Mitsui Banking Corporation, 360 ONE Special Opportunities Fund (formerly IIFL Special Opportunities Fund), and Dvara Trust.

Company Profile and Market Position

Founded in 2009 by Ashish Mehrotra, Northern Arc Capital specializes in providing credit facilities to micro, small, and medium enterprises (MSMEs), Indian households, financial institutions, and emerging businesses, including startups. The company has played a pivotal role in supporting various startups like Rebel Foods, ProsParity, slice, and BharatPe.

As a systemically important non-deposit taking NBFC registered with the RBI, Northern Arc has been instrumental in financial inclusion efforts for over a decade. The company’s diverse business model spans various sectors, products, and borrower segments, making it a key player in the NBFC space in India.

Future Prospects

Northern Arc Capital initially filed draft papers with SEBI for its public issue in July 2021 and received regulatory approval in September of the same year. However, the launch was deferred. With this upcoming IPO, the company aims to enhance its capital base and support its expansion plans.

Lead Managers

ICICI Securities, Axis Capital, and Citigroup Global Markets India are the book-running lead managers for the IPO.

Conclusion

Northern Arc Capital’s successful anchor investor funding and upcoming IPO signify a robust interest in the company’s future growth and its pivotal role in India’s financial inclusion landscape.