Northern Arc Investments announces the first closing of its India Impact Fund

Northern Arc Investments, one of the major private debt fund managers from India, on Wednesday announced the first closing of its latest Northern Arc India Impact Fund. This is the eighth debt fund from the Northern Arc platform and the first that onboarded international investors.

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With a target of $100 million in the overall corpus, the fund received $23 million in commitments from a set of high-pedigree investors. The investors that participated in the first close included PG Impact Investments backed by Partners Group, Anthos Fund and Asset Management from the Netherlands, and Calvert Impact Capital from the United States.

Formed in 2014, Northern Arc Investments is the alternative investment arm of Northern Arc Capital that manages more than $260 million in investor commitments across key sectors like microfinance, small business loans, vehicle loans, affordable housing, agri-business finance, and corporate finance.

The 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 its predecessors as this is the firm’s first fund targeting international investors.

Commenting on the announcement, Ravi Vukkadala, CEO of Northern Arc Investments, said,

“Given our significant sectoral expertise and on-ground presence, Northern Arc has emerged as the preferred gateway for overseas investors seeking to participate in the financial inclusion space in India. Risk-adjusted credit spreads in the financial services space are very attractive and we are aiming to invest well over Rs 1,000 crore of long-term capital to financial institutions over the near-term, especially those focussing on the under-served and under-penetrated segments in India."

Over its tenure of five years, the fund will invest in debt instruments including senior and subordinated debentures, commercial papers, and other permissible market instruments. Over the next 12-18 months, the fund targets to make 15-20 investments with average deal sizes ranging within $3-5 million, across its focus sectors of microfinance, small business finance, vehicle finance, and agri-business finance.

Dimple Sahni, Managing Director of Anthos Fund and Asset Management, said,

The fund provides us with an opportunity to leverage on the decade of experience built by Northern Arc across multiple sectors with the fund structure, enabling us to place our capital at work across the spectrum of financial inclusion in India."

(Edited by Suman Singh)