Northern Arc raises $25 m in debt financing from Dutch development bank

By: |
April 10, 2021 8:28 AM

Microfinance borrowers in both urban and rural areas will be key beneficiaries of FMO’s investment.

In the last 12 months, Northern Arc has attracted debt financing from an array of global DFIs and impact investors

Digital debt platform Northern Arc on Friday said it has received $25-million debt financing from FMO, the Dutch development bank and one of the world’s leading impact investors. This is the fourth transaction in a series of large-scale investments recently made by global development financial institutions and impact investors in Northern Arc.

In the last 12 months, Northern Arc has attracted debt financing from an array of global DFIs and impact investors such as US International Development Finance Corporation, Asian Development Bank and Calvert Impact Capital. The funds raised so far have been instrumental in enabling Northern Arc to provide finance to micro-loan borrowers and SMEs in India. The latest investment from FMO will be utilised for on-lending to financial institutions that focus on women borrowers, micro
entrepreneurs and SMEs.

Microfinance borrowers in both urban and rural areas will be key beneficiaries of FMO’s investment. The loans will play an important role in providing credit to under-banked households and small businesses. Similarly, high quality NBFCs that lend to micro entrepreneurs and SMEs with emphasis on small ticket sizes will also benefit from the facility.

Bama Balakrishnan, COO, Northern Arc, said, “Defined by an engagement spanning over eight years, Northern Arc and FMO are natural partners in furthering the cause of financial inclusion in India. With a shared philosophy of catering to borrowers hard hit by Covid-19 pandemic, the facility from FMO is timely and would specifically be used for lending to women, micro entrepreneurs and SMEs.”

Huib-Jan de Ruijter, chief investment officer at FMO, said: “Northern Arc acts as catalyst to NBFCs without effective access to capital markets. The new transaction fits into FMO’s ambition to accelerate financial inclusion with a focus towards women-run businesses and (M)SMEs. With this transaction, FMO supports an excellent partner who continues to service its clients during these challenging Covid-19 times.”

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