Northern Arc Capital Maps Sizeable Debt Issue to Drive Financial Inclusion Strategy

Northern Arc Capital Ltd, a premier non-banking finance company, disclosed that the company's board of directors would be considering the issuance of debt instruments to raise funds in the near future. This strategic development aims to strengthen the company's credit disbursal abilities and complement its strategy of narrowing the credit divide for marginal segments in India.

Major Highlights

The planned fundraising will be by issuing non-convertible debentures (NCDs), bonds, or comparable debt securities, infusing long-term capital in Northern Arc to expand its lending business.

Northern Arc's strong asset under management (AUM) is at ₹14,639 crore as of June 2024, with a 16% year-on-year increase and intense concentration on MSME, consumer finance, and microfinance segments.

The diversified strategy of the company prevents any one sector, except MSME, from having more than 30% of its balance sheet, which helps improve risk management and portfolio strength.

Northern Arc has recently introduced the 'Finserv Fund' through its subsidiary with a target of raising ₹1,500 crore to fuel financial inclusion in six sectors that include affordable housing and agriculture.

Regardless of sectoral headwinds, Northern Arc's disciplined risk management and steady fee-based income have underpinned stable profits, with net revenue of ₹289 crore in Q3 FY25.

The company holds a high credit rating ([ICRA]AA- Stable), reflecting its financial health and market confidence for future issuances of debt.

With this contemplated raise of debt, Northern Arc is set to further enable small businesses and individuals, further positioning it as a growth catalyst for inclusive economic growth.

Source: Business Standard, Economic Times, ICRA