Northern Arc Investments, a subsidiary of Chennai-based Northern Arc Capital, on Tuesday announced its sixth debt fund christened IFMR FImpact Income Builder Fund. The base size of the fund is Rs 150 crore with a green shoe option to increase it to up to Rs 250 crore. The fund will invest in sectors like microfinance, small business loan finance, affordable housing finance, commercial vehicle finance, agri-business finance and corporate finance.
It will seek commitments from domestic investors such as private wealth investors (HNIs) and leading corporates. Till date, Northern Arc Investments has secured commitments totaling in excess of Rs 1,000 crore across all its funds.
Having already raised R110 crore, the sixth fund has already made investments in four corporate finance and microfinance companies namely LEAP India, Satya Microcap, Fusion Microfinance and Chaitanya India Fin Credit. The final close of the fund is expected by the end of first quarter of FY19. This is a short term diversified debt fund with a 3.5 years tenure that is expected to make a total of 8 to 10 investments during the course of the fund. It will invest an average of Rs 20 crore in early to mid stage financial institutions and corporate entities. The funds will have 10% participation from the Northern Arc Group – 5% each in the form of co-investment and first loss support, giving adequate risk protection to other investors.
Ravi Vukkadala, CEO of Northern Investments, said: “The IFMR FImpact Income Builder Fund is our first in a series of short terms credit funds targeting to deliver higher risk-adjusted returns to investors. These funds will address market gaps in funding and provide differentiated debt solutions to high-quality companies. We are pleased by the response received for this fund and would like to thank our partners for their support in furthering our pursuit of financial inclusion.”