[Funding alert] Japanese multinational bank SMBC acquires 5.4 pc equity in Northern Arc Capital

Northern Arc, to date, has enabled debt financing of over Rs 75,000 crore ($10.5 billion) for financial institutions that cater to the unbanked and under-banked population in India.

Northern Arc Capital (formerly known as IFMR Capital Finance Limited), a Chennai-based debt capital platform catering to the under-banked individuals and businesses in India, has raised equity funding from Japanese multinational bank Sumitomo Mitsui Banking Corporation (SMBC), which has acquired a 5.4 percent equity in the company. 


This strategic alliance will allow SMBC to participate in investments structured and executed by Northern Arc in India and increase visibility for Northern Arc among global investors. The investment from SMBC will also help Northern Arc better address the debt needs of a growing client base across sectors, including new-age financial institutions in sectors such as consumer finance and fintech


Kshama Fernandes, Managing Director and CEO, Northern Arc Capital, said, 


“The investment by SMBC, one of the world’s largest financial services institutions, is a vote of confidence in Northern Arc’s business model, pioneering capabilities and corporate governance. We hope to leverage on the potential synergies of this partnership to further our mission of financial inclusion and widen our impact on the livelihoods of under-banked individuals and businesses.”

Kshama Fernandes, MD & CEO, Northern Arc Capital

With this round of funding, the total equity raised by Northern Arc this year stands at over Rs 1,000 crore ($140 million). Through a combination of capital, products, and partnerships, Northern Arc and its subsidiaries have created a platform that connects millions of borrowers to mainstream debt investors. Till date, the company has enabled debt financing of over Rs 75,000 crore ($10.5 billion) to 200-plus financial institutions catering to unbanked and under-banked customers, impacting the lives of over 43 million customers across more than 580 districts of India. It has also structured and executed over 500 capital markets transactions.


Masahiko Oshima, Deputy President, Sumitomo Mitsui Banking Corporation, added, 


“We are pleased to have Northern Arc Capital as our strategic partner in India, so as to provide a sustainable and differentiated approach to mandated lending in India, and deepen our commitment to investing in the country. This partnership will also allow us to contribute meaningfully towards women empowerment, financial inclusion for the underserved Indian population, and the sustainability of the Indian economy.” 

Established in 2008, Northern Arc Capital already has seven funds under its management with a cumulative AUM of Rs 1,200 crore and has gained recognition for its product structuring.

(Edited by Athirupa Geetha Manichandar)