Northern Arc Raises $25 Mn In Debt Funding

Funds from FMO will be utilized towards on-lending to MFIs and NBFCs that serve micro-entrepreneurs and SMEs
Northern Arc Raises $25 Mn In Debt Funding
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Chennai-based digital debt platform Northern Arc on Thursday announced that it has received $25 million, debt financing from FMO.

This is the fourth transaction in a series of large-scale investments made by global development financial institutions and impact investors in Northern Arc in FY21. In the last 12 months, Northern Arc has attracted debt financing from an array of global DFIs and impact investors such as the US International Development Finance Corporation, Asian Development Bank, and Calvert Impact Capital.

The funds raised so far have been instrumental in enabling Northern Arc to provide finance to micro-loan borrowers and SMEs in India, who were severely impacted by the pandemic in the last year.

The latest investment from FMO will be utilized for on-lending to financial institutions that focus on women borrowers, micro-entrepreneurs, and SMEs.

“Defined by an engagement spanning over eight years, 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,” said Bama Balakrishnan, chief operating officer, Northern Arc.

Over the last decade, Northern Arc has been instrumental in strengthening financial inclusion in India and has been at the forefront in addressing the credit requirements of the under-banked in India.

“We are very pleased to work again with our long-term partner Northern Arc. Northern Arc acts as a catalyst to NBFCs without effective access to capital markets. The new transaction fits with FMO’s ambition to accelerate financial inclusion with a focus on 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,” added Huib-Jan de Ruijter, chief investment officer, FMO.

Since its inception, Northern Arc has enabled around INR 95,000 crore of financing to its partner institutions through reputed domestic and global investors and is spread across over 570 districts in 35 states and union territories in India, as of March 31, 2021.

It is backed by marquee private equity players like Leapfrog, IIFL, Accion, Affirma Capital (erstwhile Standard Chartered Private Equity), Dvara Trust, Eight Roads, and Sumitumo Mitsui Banking Corporation. 

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