Northern Arc Capital Limited
Status: Proposed investmentWhy disclosure?
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In case of questions
We welcome feedback on this proposed investment opportunity for FMO. The ending of the proposed investment phase is indicated on the right side of this page. In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
Northern Arc Capital Limited (formerly known as IFMR Capital Finance Limited) is a Non-Banking Financial Company incorporated in 1989 that provides access to debt for under-served individuals and businesses in India. Through a combination of capital, products and partnerships, Northern Arc and its subsidiaries have created a platform that connects borrowers to debt investors. The company supports inclusive finance for, among others, (M)SMEs, targeting women, rural entrepreneurs, and economically marginalized groups in India.
What is our funding objective?
The proposed funding (5 year tenor, up to USD 75m, in INR equivalent via listed NCDs) will be used for (i) senior facilities to small and medium NBFCs and MFIs to be on-lent to micro-entrepreneurs,(ii) for NBFCs with end-beneficiaries in the microfinance, commercial vehicle finance, affordable housing finance, agri finance, and for green qualifying on-lending iii) direct lending for microfinance and loans against property. With this investment FMO will capitalize on Northern Arc’s expertise and platform to allocate capital in an efficient way to NBFCs and MFIs that have limited access to long-term funding.
Why do we want to fund this investment?
The proposed facility provides long-term funding for MFIs and NBFCs in India which have limited access to term funding from capital markets. By providing funding to Northern Arc, FMO supports entrepreneurship and innovation and encourages the formalization and growth of SMEs and microenterprises. For this transaction both FMO Green and RI Labels apply, by contributing towards SDG10 (Reduced Inequalities) and SDG13 (Climate Action).
What is the Environmental and Social categorization rationale?
The E&S risk category of the proposed investment is B. Northern Arc predominantly lends to (M)SME clients with no exposures to IFC PS related risks. The company is primarily exposed to low-risk industry sectors within the microfinance, (M)SME and corporate segments as well as through financial institutions. Key financial products include short- and medium-term loans catering for agricultural finance, working capital financing, vehicle finance and MSME sectors. All transactions are screened in line with Northern Arc’s exclusion list and in adherence to local law.
More investments
| Date | Total FMO financing |
|---|---|
| 9/19/2022 | INR 3950.00 MLN |
| 3/16/2021 | INR 1800.00 MLN |
| 12/17/2018 | INR 1000.00 MLN |
| 9/19/2022 | INR 1000.00 MLN |
| 8/11/2017 | INR 570.00 MLN |
- Website customer/investment
- https://www.northernarc.com/
- Region
- Asia
- Country
- India
- Sector
- Financial Institutions
- Publication date
- 4/19/2024
- Deadline for feedback
- 5/19/2024
- Total FMO financing
- USD 75.00 MLN
- Funding
- FMO NV
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Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B