Northern ARC Capital Ltd - Stock Valuation and Financial Performance

The company was incorporated on March 9, 1989 at Madras, India as ‘Highland Leasing & Finance Private Limited’, a private limited company under the Companies Act, 1956 and was granted a certificate of incorporation by the Registrar of Companies, Tamil Nadu at Chennai (RoC). The name of the company was changed to ‘IFMR Capital Finance Private Limited’ and a fresh certificate of incorporation dated June 19, 2009 was issued by the RoC. The company was then converted into a public limited company under the Companies Act, 2013, and consequently, the name of the company was changed to ‘IFMR Capital Finance Limited’ and a fresh certificate of incorporation dated December 12, 2017 was issued by the RoC. Subsequently, the name of the company was changed to ‘Northern Arc Capital Limited’ and a fresh certificate of incorporation dated February 20, 2018 was issued by the RoC. 

The company is a diversified financial services platform set up primarily with the mission of catering to the diverse retail credit requirements of the under-served households and businesses in India. It has developed domain expertise in enabling credit across its focused sectors in India, namely, micro, small and medium enterprises (MSMEs) financing, microfinance (MFI), consumer finance, vehicle finance, affordable housing finance and agricultural finance. The company has built an efficient and scalable business model, supported by its proprietary end-to-end integrated technology product suite customised to multiple sectors. Its in-house technology stack consists of: (i) Nimbus, a curated debt platform that enables end-to-end processing of debt transactions; (ii) nPOS, a co-lending and co-origination technology solution based on application programming interfaces (API); (iii) Nu Score, a customised machine learning based analytical module designed to assist its Originator Partners in the loan underwriting process; and (iv) AltiFi, an alternative retail debt investment platform. Its differentiated credit underwriting processes and risk models have helped it deliver strong asset quality and risk adjusted returns consistently across business cycles and macro events. The company’s three primary channels: (i) Lending; (ii) Placements; and (iii) Fund Management, delivered through its proprietary technology stack, enable streamlined and efficient digital financing solutions, and provide access to credit to the underserved categories of India across its focused sectors.

Business area of the company

Registered with the RBI as a systemically important, Northern Arc Capital is a non-deposit-taking non-banking finance company (NBFC) and has been operating in the financial inclusion space for over a decade. The company is a leading player amongst the country's diversified NBFCs, with a business model diversified across offerings, sectors, products, geographies and borrower segments. It provides access to credit to under-served households and businesses directly and indirectly through Originator Partners.

Key awards, accreditations, certifications and recognitions:

• 2018: Best Arranger of the Year at the Indian Securitisation Awards, 2018.
• 2019: Most Innovative Deal of the Year for Persistent Securitization (PerSec) product at the Indian Securitisation Awards, 2019.
• 2019: Best Arranger of the Year at the Indian Securitisation Awards, 2019.
• 2020: Best Digital NBFC of the Year at the ETBFSI Excellence Awards 2020.
• 2020: Certification as a great workplace by the Great Place to Work Institute, India under the category of small and mid-sized organizations.
• 2021: Excellence in Digital Execution for Process Innovation award at the MINT TechCircle Business Transformation Awards 2021.
• 2022: Award under the category ‘Competitive Edge for Process Innovation’ at the MINT TechCircle Business Transformation Awards 2022.
• 2023: Best BFSI Brands-2023 award by The Economic Times.
• 2023: Jury’s Choice Award under the category ‘Outstanding Name in Digital Transformation’ at the Elets 2nd NBFC 100 Leader of Excellence Awards.
• 2023: Winner under the category ‘Best Product / Service Innovation (NBFC/HFC/MFI)’ for the initiative ‘AltifiWealth Management Platform’ at the ETBFSI Excellence Awards.
• 2023: Award of appreciation under the category ‘Entity using technology to enhance bond market’ at the ASSOCHAM’s 6th National Summit and Awards – Corporate Bond Market.
• 2024: Awarded the ‘Best Brands 2024’ at the ET Now BSFI Best Brands.
• 2024: Awarded the - Preferred Wealth Tech Provider / Platform award at the Fintech Festival India 2024.

Major Events:

• 2008: Acquisition of 100% shareholding in the company by IFMR Trust.
• 2009: Commenced operations as a platform catering to diverse credit requirements.
• 2009: Entered the microfinance sector.
• 2009: Undertook the country’s first microfinance securitization transaction to enable funding to a microfinance institution.
• 2010: Arranged and structured India’s first pooled multi-originator securitisation transaction (MOSECR) which enabled funding to four Originator Partners operating in the microfinance sector.
• 2010: Completed first placement of a microfinance securitisation with private individual investor.
• 2011: Entered the MSME finance sector.
• 2011: Approved as a partner- financial institution by the Asian Development Bank to enable partial-guarantee backed lending to Indian MFIs. Through the partnership, total loans of Rs 8.93 billion under this program have been facilitated to ADB-approved MFIs.
• 2013: Entered the vehicle finance and affordable housing finance sectors.
• 2013: Completed India’s first listed securitisation of microfinance loans, which enabled funding to eight Originator Partners operating in the microfinance sector.
• 2014: Raised equity from LeapFrog Financial Inclusion India Holdings Ltd, which was a subsidiary of LeapFrog II Holdings, Ltd. and a step down subsidiary of LeapFrog Financial Inclusion Fund II, LP and LeapFrog Financial Inclusion Fund II-B, LP, which are funds focused on financial inclusion in emerging markets.
• 2014: Structured and arranged first pooled bond issuance, which enabled funding to 10 Originator Partners operating in the microfinance sector and one Originator Partner operating in education finance sector.
• 2014: Obtained SEBI registration for NAIM’s first alternative investment fund, a Category I – Social Venture Fund. Subsequently, it launched a long-term microfinance debt fund as a scheme of the fund.
• 2015: Arranged first ECB transaction for an Originator Partner in the microfinance sector.
• 2016: Entered the agricultural supply chain finance sector.
• 2016: Obtained a trademark registration for “MOSECR” .
• 2016: Raised equity from Standard Chartered Bank (entire shareholding of Standard Chartered Bank was transferred to Augusta in December, 2019) and Eight Roads.
• 2016: Expanded platform with commencement of retail business.
• 2016: Expanded platform with commencement of business with mid-market companies.
• 2017: Structured and arranged the country’s first pooled loan issuance product which enabled funding to eight Originator Partners operating across microfinance, vehicle finance and MSME finance sectors.
• 2017: Structured and arranged the country’s first single issuer partial credit enhanced (SPiCE) bond which enabled funding to an Originator Partner operating in the vehicle finance sector.
• 2018: Name changed to Northern Arc Capital Limited. 
• 2018: Undertook the company’s first persistent securitization transaction which was also India’s first vehicle loan backed securitisation transaction with replenishing structure. This transaction enabled funding to an Originator Partner operating in the vehicle finance sector.
• 2019: Underwent reorganization pursuant to the Scheme and became a company without any identifiable promoters.
• 2019: Entered the consumer finance sector.
• 2019: Facilitated the first successful exit for investors of an AIF managed by NAIM. 
• 2020: Commenced disbursement of microfinance loans under retail business through Nimbus.
• 2020: Completed disbursement of 100,000 retail loans in the financial year ended March 31, 2020.
• 2020: Shortlisted by NABARD to act as co-guarantor under the “Structured Finance and Partial Credit Guarantee Program to NBFC-MFIs”.
• 2021: Obtained debt funding from USDFC and Asian Development Bank.
• 2021: Entered into a project services agreement with a global development institution for collaboration on gender advisory programme.
• 2021: Incorporation of Pragati with the aim of offering small ticket loans to underserved rural and semi-urban areas of the country.
• 2021: Launched AltiFi, a retail investment platform that democratizes debt securities for investment opportunities to retail individuals and corporates.
• 2021: Registration of NAIM with the SEBI as a portfolio manager.
• 2022: Acquisition of identified assets and liabilities of S.M.I.L.E. Microfinance Limited, along with its loan portfolio of Rs 3,180.00 million and 144 branches.
• 2022: Registration of Northern Arc Emerging Corporates Bond Trust.
• 2022: Launch of supply chain financing, education loan and MSME loan against property business.
• 2022: Partnership with a public sector bank in relation to access to the company’s nPOS platform.
• 2023: Achieved Rs 100,000 million assets under management.
• 2023: Launch of NuScore.
• 2023: Launched subscription to public issuances of bonds on Altifi. 
• 2023: Expanded the company’s direct presence to 10 of 28 states with approximately 250 branches across India.
• 2023: Collaboration with a private sector bank for nPOS platform utilization.
• 2023: Raised over Rs 1.50 trillion in funding for its clients through its platform.
• 2024: Completed equity raise from IFC, RJ Corp Limited and Varun Jaipuria.
• 2024: Impacted over 100 million lives.
• 2024: Received certificate of registration from the IRDAI to act as a corporate agent (composite).
• 2024: Expanded direct presence to 13 of 28 states with approximately 300 branches across India.
• 2024: Obtained debt funding of $75 million from an entrepreneurial development bank.
• 2024: Registration of ‘Northern Arc Finserv Fund’ and ‘Northern Arc Fintech NBFC Fund I’ with the SEBI.