Non-banking lender based in Chennai Capital of the Northern Arc has raised Rs 229 crore from marquee investors just ahead of its upcoming initial public offering (IPO).
According to a circular on the Bombay Stock Exchange (BSE), Northern Arc has allotted 87.02 lakh equity shares to 15 funds at Rs 263 per share, which is the upper end of the price band.
Notable investors in this transaction include 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.
IPO details and structure
Northern Arc’s Rs 777 crore IPO will open for public subscription on September 16, 2024, and close on September 19. The share price band has been fixed between Rs 249 and Rs 263 per share.
The IPO consists of a fresh issue of equity shares worth Rs 500 crore and an offer for sale (OFS) of up to 10,532,320 equity shares, totalling Rs 277 crore at the upper end of the price band.
The offer for sale is being conducted by existing investors including Leapfrog Financial Inclusion India, Accion Africa-Asia Investment Company, Eight Roads Investments, Sumitomo Mitsui Banking Corporation and Dvara Trust.
Purpose of fundraising
With the funds raised, Northern Arc will focus on meeting future capital requirements, in particular to support future borrowings.
The company has been actively involved in providing credit to underprivileged households and businesses across India, with a diversified loan portfolio spanning sectors such as microfinance, MSME finance, consumer finance, vehicle finance and agricultural finance.
It has a notable fundraising record, including a $75 million investment earlier this year through non-convertible debentures from Dutch entrepreneurial development bank FMO, and an $80 million round from the World Bank’s International Finance Corporation (IFC) in April.
What does Northern Arc Capital do?
Founded by Ashish Mehrotra, Northern Arc Capital provides financial services to micro, small and medium enterprises (MSMEs), microfinance institutions (MFIs) and Indian households.
Since its inception, the company claims to have facilitated financing worth over Rs 1.73 trillion and reached over 10.18 billion people across India as of March 2024.
For the fiscal year ended March 31, 2024, Northern Arc reported a total revenue of Rs 1,906.03 crore, up significantly from Rs 1,311.2 crore in the previous fiscal year. It also posted a net profit of Rs 317.69 crore, up from Rs 242.21 crore in the previous year.
ICICI Securities, Axis Capital and Citigroup Global Markets India are the lead managers for the IPO of Northern Arc Capital, while Kfin Technologies is acting as the registrar for the issue.
The shares are expected to be listed on both the BSE and the National Stock Exchange (NSE), with September 24 tentatively set as the listing date.
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