Chennai-based non-banking financial company (NBFC), Northern Arc Capital Ltd, has taken a significant step toward its ₹2,000 crore initial public offering (IPO) by appointing ICICI Securities. Additionally, it is likely to bring Citi and Axis Capital on board as managers for the IPO, according to sources familiar with the matter.
The company initially filed its draft prospectus with the Securities and Exchange Board of India (Sebi) in July 2021 but postponed its plans due to market conditions. At that time, it had engaged IIFL Securities, Axis Capital, SBI Capital Markets, and Credit Suisse Securities for a fresh issue of ₹300 crore and an offer for sale of up to 36,520,585 equity shares.
The company is now planning to file a revised draft prospectus with Sebi by the end of November, with a target of achieving a public listing by the end of the current financial year.
Northern Arc Capital is backed by a consortium of equity investors, including Sumitomo Mitsui Banking Corp, LeapFrog, Accion, Augusta Investments (Affirma Capital), IIFL, Dvara Trust, and Eight Roads (the proprietary arm of Fidelity). It previously raised $50 million through a bond issuance from FMO, the Dutch entrepreneurial development bank.
Northern Arc specializes in providing loans to various segments, including micro, small, and medium businesses, households, financial institutions, self-employed individuals, entrepreneurs, and emerging businesses. Leveraging technology and data, the company offers diverse solutions to meet the credit requirements of these segments and small businesses.
Together with its asset management arm, which oversees seven alternative investment funds, Northern Arc manages assets totaling over ₹9,000 crore. The company reported a strong 33% year-on-year growth in consolidated net profit in FY23, reaching ₹242 crore, up from ₹182 crore in FY22. Its total income from operations on a consolidated basis grew by an impressive 44% annually, reaching ₹1,305 crore, compared to ₹909 crore in FY22.
The move to appoint ICICI Securities and potentially Citi and Axis Capital as managers for the IPO comes at a time when several NBFCs are going public. In 2023, the financial sector has witnessed several NBFC listings, with varying responses from the market. SBFC Finance Pvt. Ltd experienced a 44% premium upon listing, while Fusion Microfinance and Five Star Business witnessed more subdued responses. Northern Arc Capital’s forthcoming IPO will be closely watched in this dynamic financial landscape.
