Northern Arc Capital files DRHP for IPO

Diversified financial services platform Northern Arc Capital Limited has filed Draft Red Herring prospectus with market regulator Security Exchange Board of India (SEBI). The company plans to raise funds via IPO through issue of equity share of face value Rs 10 each comprising fresh issue aggregating up to Rs 500 crore and an offer for sale aggregating up to 21,052,629 equity shares.

Under the offer for sale, those selling their shares include LeapFrog Financial Inclusion India (II) Ltd, Accion Africa-Asia Investment Company, Augusta Investments II, Eight Roads Investments Mauritius II, Dvara Trust, 360 ONE Special Opportunities Fund and Sumitomo Mitsui Banking.

Northern Arc Capital Limited, proposes to utilize the net proceeds to meet future capital requirements towards onward lending.

Northern Arc is a diversified financial services platform set up primarily with the mission of catering to the diverse retail credit requirements of the under-served households and businesses in India. Northern Arc has developed a domain expertise in enabling credit across the focused sectors in India, namely, micro, small and medium enterprises (“MSMEs”) financing, microfinance (“MFI”), consumer finance, vehicle finance, affordable housing finance and agricultural finance. Northern Arc has been operating in the MSME, MFI and consumer finance sectors for over 13 years, 14 years and eight years, respectively.

In the six-month period ending September 30, Northern Arc reported total revenue from operations of Rs 8,381 million and profit of about Rs 1501 million.

It caters to retail credit market through a multi-channel approach that includes extending financing from balance sheet, through Originator Partners for retail on-lending and directly to under-served households and businesses with AUM of Rs 100,811 million across 682 districts, 28 states and seven union territories in India.

The NBFC had one of the lowest gross non-performing assets of 0.8% and net non-performing assets of 0.4%, as of FY23.

ICICI Securities Limited, Axis Capital Limited and Citigroup Global Markets India Private Limited are the Book Running Lead Managers to the issue.

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Harry Byrne

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