Debt facility backed by guarantees from Michael & Susan Dell Foundation and Rockefeller Foundation
- Under-banked households and micro-entrepreneurs across the country with a monthly household income of less than INR 25,000, will be the key beneficiaries of the funding
Chennai, April 19, 2021: Northern Arc, one of India’s leading digital debt platforms, today announced that it has received INR 40 crore of debt financing from Kotak Mahindra Bank, one of the country’s largest private banks. The facility is backed by partial guarantees from The Michael & Susan Dell Foundation (MSDF) and The Rockefeller Foundation. The transaction is part of the covid-response package of both these impact institutions, that aims to alleviate the economic and social impact of the pandemic.
The deal is the latest in a series of sanctions received by Northern Arc from Development Finance Institutions, as a recognition for its critical role in enabling debt for underbanked retail households, small businesses and financial institutions. The proceeds from this investment will be used to lend to retail households and microentrepreneurs with a household monthly income of less than INR 25,000. Over the last year, Northern Arc has attracted debt financing from an array of global DFIs and impact investors such as US International Development Finance Corporation, Asian Development Bank, Calvert Impact Capital and FMO. 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 one year.
Announcing this landmark deal, Bama Balakrishnan, COO, Northern Arc said, “The transaction is a unique result of our structuring & product development capabilities combining with our extensive investor reach to help raise funding for our own Balance sheet. While we usually adopt this approach to benefit smaller partner institutions, this deal is proof that it can help larger and higher rated NBFCs raise debt at better pricing.”
“The Covid Liquidity Fund demonstrates the power of catalytic capital to harness effective solutions for Indian micro-entrepreneurs who are facing critical challenges and paves new ways to save jobs and bolster economic activity, especially of the most vulnerable (poor and rural) populations. It will cover the working capital needs of thousands of women entrepreneurs, along with mini-grid companies and micro-enterprises supported by Smart Power India,” says Deepali Khanna, Managing Director of Asia Regional Office at The Rockefeller Foundation. “The true measure of our success will come through the lasting on-the-ground improvements—day to day, year to year— stemming from our investments.”
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. As of March 31, 2021, the company has enabled significant debt financing of around INR 95,000 crore for its clients across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance, consumer finance, fintech and mid-market corporates. Over 140 reputed investors (banks, asset managers, insurance companies, DFIs, private wealth etc.) have invested in transactions structured and arranged by Northern Arc Capital.
About Northern Arc
Northern Arc Capital Limited (formerly IFMR Capital Finance Limited) is a leading digital debt platform that addresses the credit requirements of the under-banked in India. These include financial institutions, mid-market enterprises, small businesses and individuals. Through its deep credit-insights, varied risk-models, structuring capability and agile technology, Northern Arc offers suitable debt products that meet the requirements of borrowers and lenders.
Northern Arc acts as a critical bridge between emerging sectors and reputed investors, covering the wide gamut of credit opportunities through innovative products and structures. It has developed several innovative structures in the Indian market including the Multi-Originator Securitisation (MosecTM), the Covered Bond, the Pooled Loan/Bond Issuance and the Single Issuer Partially Credit Enhanced (SPiCETM) Bond.
Till March 31, 2021, Northern Arc has enabled around INR 95,000 crore of financing to its partner institutions through reputed domestic and global investors. Northern Arc’s exposure is spread across over 570 districts in 35 states and union territories in India, as on 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.
About The Michael & Susan Dell Foundation
The Michael & Susan Dell Foundation in India is focused on enabling children and youth from low-income communities in India reach their goals through improved education and employment opportunities. This focus is driven by investments in education, jobs & livelihood, and financial inclusion. With over $200 million in investments over the past 15 years, the foundation has impacted the lives of over 12 million children and families in the country.
About The Rockefeller Foundation
The Rockefeller Foundation advances new frontiers of science, data, and innovation to solve global challenges related to health, food, power, and economic mobility. As a science-driven philanthropy focused on building collaborative relationships with partners and grantees, The Rockefeller Foundation seeks to inspire and foster large-scale human impact that promotes the well-being of humanity throughout the world by identifying and accelerating breakthrough solutions, ideas, and conversations. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.