Proparco commits $25m to India's Northern Arc
French development finance institution Proparco has invested USD 25m in debt in India’s Northern Arc Capital, a microfinance and small business lender with several private equity backers.
The capital is expected to support some 21,000 micro-borrowers locally. It will be partially directed toward helping women entrepreneurs. Proparco is a founding member of the 2X Challenge, a global gender finance initiative for developing markets.
In addition to microfinance and small business lending, Northern Arc is active across vehicle finance, affordable housing, and agricultural supply chain finance, as well as intermediary services connecting established financial institutions with other non-bank lenders targeting underserved markets.
The company also manages impact debt funds, the most recent of which closed on USD 23m in 2020. The GP, Northern Arc Investments, is led by Ravi Vukkadala, formerly of the fixed income investment team at Invesco Mutual Fund.
Northern Arc claims it has enabled USD 95bn worth of loans and some 900 transactions for more than 400 investors and 225 client partners since it was established as IFMR Capital in 2008. Scoring is facilitated by an artificial intelligence-enabled platform with 25m datapoints.
In March, the company appointed Ashish Mehrotra, formerly of Niva Bupa Health Insurance and Citibank India, as managing director and CEO. These roles were filled during the prior 10 years by Kshama Fernandes, who has stayed on as a non-executive director and non-executive vice chairperson.
Previous investors include Affirma Capital, IIFL Asset Management, LeapFrog Investments, Accion, Eight Roads Ventures, Sumitomo Mitsui Banking Corporation, Development Finance Corporation, FMO, Calvert Impact Capital, and Asian Development Bank. Japan International Cooperation Agency provided USD 50m in debt last year.
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