Impact investor Northern Arc secures $50 mn from US development bank USIDFC

Chennai-based non-banking finance company Northern Arc Capital on Friday said it has received $50 million of debt financing from US International Development Finance Corporation, a Washington, DC-based development bank that enables the US federal government to make equity investments in overseas projects.

The funds will be utilised to support the growth and liquidity needs of its institutional clients as well as lend to small businesses and individuals, with focus areas being employment and women entrepreneurship, according to the statement.

“The transaction will allow us to support small and mid-sized NBFCs that are unable to attract debt funding from investors, especially after the onset of the Covid-19 pandemic and the resultant lockdown. These entities operate across India’s landscape serving nearly 50 million customers across 580 districts,” Bama Balakrishnan, chief financial officer at Northern Arc said.

Formerly called IFMR Capital, Northern Arc Capital operates as a pan-India debt platform for the underbanked population. It has so far financed debt of nearly $11 billion for a clientele across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance and corporate finance.

Established in 2008, the fund has over 140 investors from asset classes of banks, asset managers, insurance companies, development finance institutions and private wealth among others.

Some of the lender’s backers include Dvara Trust, Eight Roads Ventures, Leapfrog Investments and Standard Chartered PE. Through a combination of capital, products and partnerships, it connects millions of borrowers to mainstream debt investors.

“We are especially proud that our financing will support loans that empower women, who are often disproportionately impacted by crises like Covid-19, as well as expanded access to water, sanitation, and food, which are central to global health resilience,” Edward Burrier, USIDFC’s executive vice president of strategy said.

The development comes about a month after Hyderabad-based impact investor Caspian Debt raised a debt of $20 million from USIDFC.