Northern Arc Launches INR 15 billion Finserv AIF Fund

The Category II AIF aims to raise a target corpus of INR 15 billion, including a green shoe option of INR 5 billion.

New Delhi  – Northern Arc, one of the leading diversified non-banking financial services companies in India is excited to announce the launch of its performing credit AIF fund (Category II) – ‘Finserv Fund’ through its subsidiary, Northern Arc Investment Managers (NAIM).  The fund aims to raise a target corpus of INR 15 billion, including a green shoe option of INR 5 billion.

Powered by proprietary data-rich technology solutions, strong sectoral expertise, robust risk management, and a financial ecosystem of originator partners, Northern Arc operates a diversified Lending, Placements and Fund Management business to facilitate finance of over INR 1.81 trillion aiming to empower the underserved households and businesses.

By leveraging Northern Arc’s extensive experience and innovative financial solutions, the Finserv fund aims to make a significant impact on financial inclusion and economic growth across the 6 sectors – MSME, Affordable Housing, Vehicle Finance, Agriculture Finance, Microfinance and Consumer Finance. The fund’s 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.

Northern Arc manages an AUM of INR 146,390 million through its balance sheet and active AIF funds as of June 30, 2024. NAIM has had four successful fund exits that have provided net fund returns of 11.72%-15.77% post-expense pre-tax, without any delays and defaults.

Ashish Mehrotra, Managing Director & CEO of Northern Arc, commented, “The ‘Finserv Fund’ launch marks another significant milestone in Northern Arc’s mission to bridge the financial gap for underserved individuals and businesses by leveraging our pivotal strengths in proprietary data and technology. Through NAIM, a Northern Arc subsidiary, we have invested over INR 100,500 million largely in financial institutions since inception, with zero defaults to investors to date. Our extensive network experience of 328 originator partners,50 retail lending partners, 1000+ investor partners and deep sectoral expertise allows us to manage a diverse portfolio effectively, while our robust risk management philosophy promotes the protection of our investor interests. The fund’s philosophy is to create a cascading effect for supporting unserved communities, fostering financial inclusion and promoting sustainable growth. Our proven track record in achieving and exceeding target returns instils confidence in our ability to deliver substantial value to our investors while making a meaningful impact in the society.”

Bhavdeep Bhatt, Chief Executive Officer of Northern Arc Investments, added, “The Finserv Fund is the 11th AIF launch from our fund management platform apart from the 2 PMS funds we manage. We have successfully closed and exited four funds at higher-than-targeted returns to our investors. This Finserv Fund will invest in a meticulously curated portfolio of companies with proven performance and governance standards. It will invest in a well-diversified portfolio across 45-55 entities within our key sectors. This fund targets gross returns of 14.00-14.50% XIRR over its four-year tenure, with a deployment period of approximately six months from the final close.”

Through the Finserv Fund, Northern Arc aims to provide long-term debt capital to financial intermediaries focused on lending to underserved and unserved segments, thus enabling access to finance for all.

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