Over its tenure of five years, the fund will invest in a number of debt instruments, including senior and subordinated debentures, commercial papers, and other permissible market instruments.
Northern Arc Investments, one of the leading private debt fund managers, on Monday announced the first closing of its latest fund, Northern Arc India Impact Fund. This is the eighth debt fund from the Northern Arc platform and the first fund to onboard international investors.
The fund, which targets an overall corpus of $100 million (including a greenshoe of $50 million), garnered $23 million in commitments from a set of high-pedigree investors to mark its first close. Key investors participating in the first close included PG Impact Investments, a leading global impact investment firm backed by global private markets investment manager Partners Group, Anthos Fund & Asset Management from the Netherlands and Calvert Impact Capital, an institutional impact investor based in the US.
Northern Arc’s earlier funds have witnessed participation from a wide and diverse array of investors, including development financial institutions, banks, insurance companies, family offices, foundations and HNIs from India. The current fund marks a significant departure from its predecessors as this is the firm’s first fund targeting international investors.
Ravi Vukkadala, CEO, Northern Arc Investments, said: “Given our significant sectoral expertise and on-the-ground presence, Northern Arc has emerged as the preferred gateway for overseas investors seeking to participate in the financial inclusion space in India. Risk adjusted credit spreads in the financial services space are very attractive and we are aiming to invest well over Rs 1,000 crore of long-term capital to financial institutions over the near term, especially those focusing on the under-served and under-penetrated segments in India.”
Over its tenure of five years, the fund will invest in a number of debt instruments, including senior and subordinated debentures, commercial papers, and other permissible market instruments. Over the next 12-18 months, the fund targets to make 15-20 investments with average deal sizes ranging from $3-$5 million, across its focus sectors of micro-finance, small business finance, vehicle finance and agri-business finance. The fund has been rated AA+ (SO) Equivalent by Crisil on capital protection and offers a strong risk-return value proposition to investors. Reflective of its track record in generating superior risk adjusted returns, all of the firm’s past funds have witnessed strong investor participation (including re-ups) and have seen the exercise of greenshoe option ? a feat that the firm expects to replicate in the current fund.
The fund will draw strong support from parent company Northern Arc Capital’s experience in financial inclusion sectors; spanning proprietary lending, investing and structured finance. Northern Arc Capital has already developed stringent underwriting guidelines as well as built significant capital market and credit history for the fund’s target sectors.