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Northern Arc Investments, a wholly-owned subsidiary and the fund-management vertical of Northern Arc Capital, on Monday announced the first closing of its latest fund, Northern Arc India Impact Fund. 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
This is the eighth debt fund from the Northern Arc platform and the first fund to onboard international investors. 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 and Asset Management, from the Netherlands; and Calvert Impact Capital, an institutional impact investor based in the United States.
“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,” said Ravi Vukkadala, CEO, Northern Arc Investments.
Northern Arc Investments is the alternative investment arm of Northern Arc Capital that manages more over $260 million in investor commitments across key sectors such as microfinance, small business loans, vehicle loans, affordable housing, agri business finance and corporate finance.
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 the previous one as this is the firm’s first fund targeting international investors.
The fund will invest in a number of debt instruments, including senior and subordinated debentures, commercial papers, and other permissible market instruments over its tenure of fiveyears, the release said, adding that over the next 12 to 18 months, the fund targets to make 15 to 20 investments with average deal sizes ranging from $3 to 5 million across its focus sectors.
Investor participation
The release further added that 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 has witnessed strong investor participation (including re-ups), and has seen the exercise of green-shoe option, a feat the firm expects to replicate in the current fund.
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