Private equity-backed debt financier Northern Arc Capital Ltd has raised $25 million (around Rs 187 crore) in external commercial borrowings (ECB) from AFD Group’s private sector financing arm, Proparco.
The long-term funding will be used by Northern Arc (formerly IFMR Capital Finance) to serve MSMEs and women entrepreneurs. It will also be deployed to provide differentiated credit solutions to these customers both directly and through partners, the financier said in a statement.
Since inception in 2009, the Northern Arc Group has enabled financing for Originator Partners who have impacted over 54 million lives across India, of which more than 42 million were women. The debt lender has raised close to about Rs 1 trillion in financing for customers.
Chennai-based Northern Arc is backed by investors including LeapFrog, IIFL, Accion, Augusta Investments (known as Affirma Capital), Dvara Trust, Eight Roads and Japanese bank Sumitomo Mitsui Banking Corporation (SMBC).
“This transaction is proof of Northern Arc’s ability to forge partnerships with and attract funding from reputed global DFIs. The usage of proceeds will be towards enabling the next billion customers access financial services directly through digital channels as well as serving them through partnerships,” said Ashish Mehrotra, managing director and chief executive officer of Northern Arc Capital.
Proparco is the private sector financing subsidiary of Agence Française de Développement Group. It provides funding and support to both businesses and financial institutions in Africa, Asia, Latin America and West Asia.
“Nothern Arc’s mission to enable access to finance for the underbanked in an efficient, scalable and reliable way is in line with Proparco’s Financial Inclusion strategy in India,” said Diane Jegam, Regional Director – South Asia, Proparco.
In May, Northern Arc Capital invested in fintech startup Karbon Card, in a debt financing round.
Early this year, VCCircle reported that Northern Arc had entered into an agreement to acquire Chennai-based microfinance business of S.M.I.L.E. Microfinance Ltd through a slump sale.