Northern Arc Capital gets SEBI nod to raise funds via IPO

Financial services platform Northern Arc said on Monday that it has received markets regulator Securities and Exchange Board of India (SEBI) approval to raise funds through initial public offerings (IPO).

The company submitted the draft red herring prospectus (DRHP) to the regulator in February this year for raising funds through an IPO. This initial public offering includes a fresh issuance of equity shares worth ₹500 crore and an offer-for-sale of 2.1 crore equity shares by existing investors.

The entities 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.

Northern Arc Capital, which filed preliminary IPO papers with SEBI in January, received its observation letter on July 12, according to an update. In SEBI's terms, obtaining an observation letter signifies approval to proceed with the public issue.

According to the draft papers, the proceeds from the fresh issue will be used to meet the company's future capital requirements for onward lending.

Registered with the RBI as a systemically important non-deposit-taking non-banking finance company (NBFC), Northern Arc has been operating in the financial inclusion space for over a decade. It is a leading player among the country's diversified NBFCs, with a business model that spans various offerings, sectors, products, geographies, and borrower segments. The company provides access to credit for under-served households and businesses, both directly and indirectly, through Originator Partners.

Previously, Chennai-based Northern Arc Capital filed draft papers with SEBI in July 2021 to launch its maiden public issue, receiving the regulator's approval in September of the same year. However, it did not proceed with the launch at that time.

In addition to Northern Arc Capital, Shree Tirupati Balajee Agro Trading Company Ltd also received SEBI's observations on July 12 to proceed with its IPO. The company had filed draft IPO papers with the regulator in March.

(With inputs from PTI)