Debt venture firm Northern Arc raises $10 million via External Commercial Borrowing (ECB)

• Northern Arc will use the funds towards on-lending to financial institutions as well as directly to retail customers.
• The firm has Eduvanz, Origo, KrazyBee, WayCool, Asirvad Microfinance, others in its investment portfolio.
• It operates Northern Arc Investments and Northern Arc Foundation.

Chennai-based debt venture firm Northern Arc Capital has raised $10 million (about Rs 72 crore) from US-based non-profit investment firm Calvert Impact Capital via External Commercial Borrowing (ECB).

External Commercial Borrowing (ECB) is a type of debt borrowing taken by an eligible entity for commercial purposes from non-resident lenders or any recognized entity outside India.

Northern Arc Capital will utilize the borrowed funds towards on-lending to financial institutions, retail customers, and mid-market companies, the statement said. Earlier this month, Northern Arc had raised $50 million in debt from US International Development Finance Corporation (DFC).

Backed by Dvara Trust, Eight Roads Ventures, Leapfrog Investments, Northern Arc Capital (formerly IFMR Capital) provides debt funding to under-banked individuals and businesses in India.

Commenting on the fundraise, Bama Balakrishnan, Chief Operating Officer of Northern Arc, said, "The partnership with Calvert Impact Capital is long-term and multi-dimensional, helping both organisations achieve common goals across impact and growth."

"These include aiding small businesses and promoting gender equity, a cause that is strongly endorsed by both organisations. The facility’s longer duration will expand Northern Arc’s ability to fund MSMEs and households," she added.

Underbanked customers, including low-income households and small businesses, to whom credit has dried up over the last few months due to the pandemic, will be a key beneficiary of the proceeds, the statement said.

Similarly, the proceeds will also benefit early-stage businesses, small & medium enterprises (SMEs), Non-banking financial corporations (NBFCs) that have strong business models but facing financial liquidity.

Also Read: Social commerce startup DealShare raises $3.4 million debt funding from InnoVen Capital

Daniel Ford from Calvert Impact Capital, said, “Northern Arc has been instrumental in strengthening Indian debt capital markets to the benefit of organisations serving underbanked populations. As an investor, we benefit from leveraging the market and credit expertise of the Northern Arc team as we put capital to work for impact in India."

Northern Arc Capital has Eduvanz, Slice, Origo, Asirvad Microfinance, Shiksha Finance, Light Microfinance, KrazyBee, SMEcorner, WayCool, among others in its investment portfolio.

It counts Affirma Capital, IIFL Special Opportunities Fund, Sumitomo Mitsui Banking Corporation, Standard Chartered Private Equity, Eight Roads Ventures, LeapFrog Investments, Asian Development Bank, as its investors.

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