Northern Arc Capital files DRHP with SEBI to raise ₹500 crore via IPO

Northern Arc Capital Ltd has filed preliminary papers with capital markets regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The IPO of the non-banking financial company (NBFC) will be a combination of fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) of up to 2.1 crore equity shares by investor shareholders, according to the draft red herring prospectus (DRHP).

Those offering shares through the OFS include Leapfrog Financial Inclusion India (II) Ltd, Accion Africa-Asia Investment Company, Augusta Investments II Pte Ltd, Eight Roads Investments Mauritius II Ltd, Dvara Trust, and IIFL Special Opportunities Fund. 

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Northern Arc Capital may consider mobilising up to ₹100 crore in a pre-IPO round. Axis Capital, ICICI Securities, and Citigroup Global Markets India have been appointed as the merchant bankers to advise the company on the IPO, according to the draft papers.

The proceeds from the fresh issue will be used to meet future capital requirements of the company towards onward lending. Registered with the Reserve Bank of India (RBI), the company is a non-deposit taking non-banking financial company and has been operating in the financial inclusion space for over a decade.

Northern Arc is a leading player among the country's diversified NBFCs, with a business model diversified across offerings, sectors, products, geographies, and borrower segments. It provides access to credit to under-served households and businesses directly and indirectly through originator partners.

In other words, the NBFC aims to provide reliable access to debt capital for the institutions that impact financially excluded households and enterprises. Earlier, the Chennai-based Northern Arc Capital filed draft papers with Sebi in July 2021 to float its maiden public issue. It received the regulator's nod to float the public issue in September same year. However, the company did not go ahead with the launch.