Affirma, IIFL invest $132m in India's Northern Arc
IIFL Asset Management (IIFL AMC) and Affirma Capital, a spin-out of Standard Chartered Private Equity (SCPE), have invested INR9.1 billion ($131.9 million) in Indian non-banking finance company (NBFC) Northern Arc Capital.
The transaction includes a partial exit by Northern Arc’s early backers LeapFrog Investments and Accion International, as well as financial inclusion investor Dvara Trust. All three will remain “significantly invested” in the business, according to a release. LeapFrog invested in 2014 and made a partial exit in 2016 to Eight Roads Ventures India.
Northern Arc was founded in 2008 as IFMR Capital, aiming to address the debt capital needs of India’s emerging non-bank lenders. The company connects established financial institutions to NBFCs and other small lenders targeting underserved markets, promoting itself as a trusted intermediary that can help mitigate the risk of debt investors wary of supporting emerging, specialized financial players.
Since its launch, Northern Arc claims to have enabled debt financing of around INR700 billion for clients across sectors including small business, vehicle, affordable housing, agriculture, and corporate finance, through transactions involving over 125 investors. It will use the new capital to build its capabilities in new sectors including consumer finance and financial technology, along with deepening existing client relationships.
“Over the last decade, Northern Arc has created a strong platform, which enables access to debt capital for emerging sectors,” said Prashasta Seth, CEO of IIFL AMC. “With strong tailwind from these emerging sectors and Northern Arc’s continued focus on execution, we believe the Company is poised for rapid growth. We are indeed privileged to partner with them at this inflection point.”
Affirma launched last year under the management of the former leadership team of SCPE, taking the majority of the bank’s remaining $1 billion in PE assets off its balance sheet. As of January, the firm had $3.6 billion under management across Southeast Asia, India, China, South Korea, the Middle East, and Africa.
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