Northern Arc Aims To Raise Rs 1,000 Crore Alternate Investment Fund

Non-bank lender Northern Arc on Monday said one of its arms is aiming to raise Rs 1,000 crore in an alternate investment fund (AIF).

The category II AIF aims to raise Rs 1,000 crore, and has the scope to raise an additional Rs 500 crore through the green shoe option.

The "Finserv Fund" being launched by the recently listed NBFC's subsidiary Northern Arc Investment Managers (NAIM) will use the money for lending to six varied sectors which will help improve financial inclusion and economic growth, as per an official statement.

The six sectors include small businesses, affordable housing, vehicle finance, agriculture finance, microfinance and consumer finance, it said.

The AIF is targeting to invest in 45-55 entities across its four-year cycle and deliver an internal rate of return of 14-14.50 per cent to the investors, NAIM chief executive Bhavdeep Bhatt said.

The investment strategy focuses on higher risk-adjusted returns and regular investor cash flows by investing in a diversified pool of debt securities of financial institutions to support their growth, the statement said.

The NBFC has Rs 14,639 crore of assets under management through its balance sheet and active AIF funds as of June 30, 2024, while NAIM has had four successful fund exits that have provided net fund returns of 11.72 per cent - 15.77 per cent post-expense pre-tax.

Northern Arc's managing director and chief executive Ashish Mehrotra said its network of 328 originator partners, 50 retail lending partners and over 1,000 investor partners will allow it to manage the portfolio effectively.