The Chennai-based non-banking lender would use the new funds to further expand and broaden its reach to end consumers. Northern Arc, established in 2009, is a non-banking financial corporation (NBFC) that intends to deliver a range of retail credit services to underserved households and companies in India. This comes at a time when the financial services firm has refiled draft documents with market regulator SEBI for an initial public offering.

Northern Arc

Northern Arc, a non-banking lender, has raised $80 million (INR 667 crore) from the World Bank Group’s private-sector investment arm, International Finance Corporation (IFC), divided equally between equity and debt.

Northern Arc plans to use the new funding to expand its operations and reach out to new clients.

Northern Arc, a non-banking financial corporation (NBFC), was founded in 2009 with the goal of providing a range of retail credit services to India’s underserved households and enterprises.

It has developed competence in enabling lending across a variety of sectors, including MSMEs, MFIs, consumer financing, auto financing, affordable housing financing, and agriculture financing.

Its multi-channel lending, placement, and fund management strategy aims to increase the supply of credit to customers.

The non-banking lender with headquarters in Chennai states that as of September 30, 2023, its technological platform had enabled the financing of over INR 1.5 trillion in credit.

Northern Arc manages INR 10,081 crore in assets and has investors including Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE (formerly known as IIFL), Accion, Augusta Investments (formerly known as Affirma Capital), Dvara Trust, and Eight Roads (a proprietary arm of Fidelity).

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

According to Inc42, “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,” Wendy Werner, the country head of the IFC India, said.

The money comes at a time when Northern Arc is ramping up its initial public offering (IPO) ambitions. In February, it refiled draft papers with market regulator SEBI for an IPO, with ambitions to raise INR 500 crore through a fresh offering and an offer for sale.

According to Inc42, Northern Arc raised $50 million in February 2022 through non-convertible debentures issued by the Dutch entrepreneurial development bank FMO.