Digital debt financing platform Northern Arc Capital has filed its Draft Red Herring Prospectus (DRHP) with the market regulator SEBI to raise funds through initial public offering (IPO).
The IPO comprises of fresh issue of equity shares of Northern Arc Capital Ltd aggregating up to Rs 300 crore and an offer for sale (OFS) of up to 36.52 million equity shares by its existing shareholders and promoters.
The OFS will include participation from existing shareholders such as Leapfrog Financial Inclusion India, Accion Africa-Asia Investment Company, Augusta Investments II PTE. Ltd., Eight Roads Investments Mauritius II Limited, Dvara Trust, IIFL Special Opportunities Fund series 1, 2, 3, 4 and 5.
The offer includes a reservation for subscription by eligible employees not exceeding 5% of the Company’s post-offer paid-up equity share capital.
The Chennai-based lender said it may consider issuing shares on a private placement for up to Rs 150 crore prior to filing of the DRHP as Pre-IPO placement.
Northern Arc Capital
Northern Arc Capital (formerly IFMR Capital Finance) is a digital debt platform that caters to the under-banked in Indian financial services sector set up primarily to provide access to debt capital to meet diverse credit requirements of under-served households and businesses.
The proceeds from the issue will be used towards augmenting its base capital to meet future capital requirements.
As on March 2021, its capital to risks weighted asset ratio was 28.89% of which tier-I capital was 27.62%.
Axis Capital Limited, Credit Suisse Securities (India) Private Limited, IIFL Securities Limited and SBI Capital Markets Limited are the Book Running Lead Managers to the issue.
For FY21, Net profit stood at Rs 76.59 crore on a total revenue from operations at Rs 681.17 crore as compared with Rs 102.93 crore a year ago on a revenue of Rs 632.82 crore last year. Its gross NPA stood at 2.3% while net NPA was at 0.9%.
The non-deposit taking NBFC’s total outstanding borrowings were at Rs 3,920.81 crore.
Last month, it had launched an alternative investment platform AltiFi for individual investors.
In May, Northern Arc Capital and other lenders invested Rs 165 crore debt funding in credit and payment startup Slice during financial year 2020-21.
Over the last year, Northern Arc Capital has attracted debt financing from an array of global development finance institutions (DFIs) and impact investors such as US International Development Finance Corporation, Asian Development Bank, Calvert Impact Capital, and FMO.
In April, it raised debt capital from mid-sized private-sector lender Kotak Mahindra Bank to support pandemic-hit micro-entrepreneurs and micro, small and medium enterprises (MSMEs).