Northern Arc Capital secures $50 million of debt financing from DFC

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Northern Arc Capital, a non-banking finance company (NBFC) that provides access to debt capital for under-banked individuals and businesses, on Friday announced that it has received a commitment of $50 million of debt financing from the US International Development Finance Corporation (DFC).

To support the growth

In a press release, the debt financing company said the funds will be used to support the growth and liquidity needs of its institutional clients as well as lend to small businesses and individuals.

“It will be deployed to support women entrepreneurship and employment, food security and water, sanitation and hygiene,” Northern Arc added.

DFC is America’s development bank. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world. Its investment covers sectors such as energy, healthcare, critical infrastructure, and technology. DFC also provides financing for small businesses and women entrepreneursto create jobs in emerging markets.

“Northern Arc and DFC are natural partners in the effort to serve the underbanked and promote women entrepreneurship,” Bama Balakrishnan, CFO of Northern Arc Capital, was quoted in the statement.

“The transaction will allow us to support small- and mid-sized NBFCs that are unable to attract debt funding from investors, especially after the onset of the Covid19 pandemic and the resultant lockdown. These entities operate across India’s landscape serving nearly 50 million customers across 580 districts,” she added.

Till date, Northern Arc has enabled debt financing of around ₹83,000 crore to its clients across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance, and corporate finance. Over 140 investors, including banks, asset managers, insurance companies, DFIs and private wealth, have invested in transactions structured and arranged by Northern Arc Capital.

“The role of the Northern Arc takes on added importance in the wake of Covid-19, which is disrupting access to capital that individuals, families, and businesses so desperately need,” Edward A. Burrier, DFC Executive Vice- President, Strategy, was quoted in the statement.

“We are especially proud that our financing will support loans that empower women, who are often disproportionately impacted by crises such as Covid-19, as well as expanded access to water, sanitation, and food, which are central to global health resilience,” he added.