Non-banking financial company (NBFC) Northern Arc on Thursday announced its maiden climate fund through its fund management arm, Northern Arc Investments IFSC Trust and $65 million in debt commitments for the fund. This included $50 million from the United States International Development Finance Corporation (DFC) and $15 million from OeEB, the official Development Bank of the Republic of Austria.
Based in Gujarat International Finance Tec-City (GIFT City), the company said the new fund will focus on growth-stage companies in commercial, industrial, and residential solar energy, energy efficiency, green buildings and materials, e-mobility, and sustainable agriculture sectors. Moreover, businesses innovating in the circular economy, water segment and adaptation technologies, which aim to reduce environmental impact and promote long-term resilience, would also be in focus.
Speaking on the initiative, Ashish Mehrotra, Managing Director & CEO, Northern Arc said that “by channelling these funds into green projects across our focus sectors of MSME, affordable housing, vehicle finance, agriculture finance, microfinance and consumer finance, we aim to create a cascading effect that promotes sustainable development.”
Northern Arc operates lending, placements and fund management business which has facilitated financing of over Rs 1.9 lakh crore so far and manages an overall AUM of Rs 15,121 crore through its balance sheet and active AIF funds as of September 30, 2024.
Northern Arc has had six successful fund exits that have provided with net fund returns of 11.72-15.77 per cent post expense pre-tax, without any delays and defaults.
“This transaction aligns with DFC’s goal of expanding financing for small and medium sized businesses that are promoting climate mitigation action and resilience through innovative technology including in the energy, agriculture, and e-mobility sectors,” said Justin Andrews, DFC’s Acting Vice President of Small Business & Financial Services.
The new fund aligns with India’s broader climate goals, particularly its push towards renewable energy and sustainable practices.
“Supporting India’s sustainable transition is essential for the global fight against climate change, and the expansion of renewable energy is of central importance for the country’s continued economic development. Therefore, OeEB is planning to contribute $ 15 million to the climate fund, and we are looking forward to working together with Northern Arc”, says OeEB’s Member of the Executive Board Sabine Gaber.