Northern Arc Capital raises $25 million debt from FMO

Northern Arc Capital, a Chennai-based non-banking finance company (NBFC), has raised $25 million in debt from Dutch impact investor FMO. The fundraising comes close on heels of $10 million debt raised by the company last month from US-based Calvert Impact Capital.

Besides Calvert Impact, Northern Arc has attracted debt financing from an array of global Development Finance Institutions (DFIs) and impact investors over the last 12 months including from US International Development Finance Corporation (DFC) and Asian Development Bank (ADB).

Microfinance borrowers in both urban and rural areas will be key beneficiaries of FMO’s investment, the debt financing platform said in a press release.

“A sizable part of the fund deployment will be towards MFIs whose loans are primarily targeted at women. The loans will play an important role in providing credit to the under-banked households and small businesses, who have been worst hit due to the crisis,” it added.

Commenting on the deal, Bama Balakrishnan, COO of Northern Arc said, “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.”

As of March 31, 2021, Northern Arc has enabled significant debt financing of around Rs. 95,000 crore for its clients across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance, consumer finance, fintech and mid-market corporates.

Over 140 investors including banks, asset managers, insurance companies, DFIs, private wealth have invested in transactions structured and arranged by Northern Arc Capital.

“The new transaction fits with 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,” Huib-Jan de Ruijter, Chief Investment Officer (a.i), FMO was quoted in the release.