Northern Arc Capital IPO

Their 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 their Company was changed to `IFMR Capital Finance Private Limited’ and a fresh certificate of incorporation dated June 19, 2009 was issued by the RoC. Their Company was then converted into a public limited company under the Companies Act, 2013, and consequently, the name of their 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 their Company was changed to `Northern Arc Capital Limited’ and a fresh certificate of incorporation dated February 20, 2018 was issued by the RoC. For further details in relation to changes in the name and the registered office of their Company, see History and Certain Corporate Matters beginning on page 318. Their Company is registered with the Reserve Bank of India (the RBI) as a non-banking financial company (NBFC) not accepting public deposits (certificate of registration No. B-07.00430).

The Indian retail credit market is expected to further grow at a CAGR of 17-18% between Fiscals 2024 and 2026 to reach Rs. 100.9 trillion by Fiscal 2026. NBFCs loan outstanding for MSME, MFI, consumer finance, vehicle, affordable housing and agriculture loans are expected to grow at a CAGR of 13-15%, 23-25%, 17-20%, 12-14%, 14-16% and 9-10%, respectively, between Fiscals 2024-2026. Rural areas, which accounted for 47% of GDP, received only 9% of the overall banking credit, as of March 31, 2024, which also shows the vast market opportunity for banks and NBFCs to lend in these areas.

There are 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. Over the last 15 years, Their approach has been to create a differentiated and comprehensive play on the retail credit ecosystem in India spread across sectors. Since 2009, there have facilitated financing of over Rs. 1.73 trillion that has impacted over 101.82 million lives across India, as of March 31, 2024. There have one of the lowest industry-wide credit costs amongst diversified NBFCs in India, as of March 31, 2024.

Northern Arc Capital IPO Strengths

• Large addressable and underpenetrated market with strong sectoral expertise.
• Large ecosystem of partners and data and technology platform creating strong network effects.
• Proprietary technology product suite transforming the debt market ecosystem.
• Robust risk management based on domain expertise, proprietary risk models and data repository driving asset quality.
• Diversified sources of funding for their own deployment and proactive liquidity management.

Northern Arc Capital IPO Risks

• There operate a diversified business model that exposes us to various risks and an inability to manage such risks may have an adverse effect on their business, results of operations, cash flows and financial condition.
• If their borrowers default in their repayment obligations it may lead to increased levels of non-performing assets (NPA), related provisions and write-offs, their business, results of operations, cash flows and financial condition may be adversely affected.
• There do not have any identifiable promoter in terms of the SEBI ICDR Regulations and the Companies Act, 2013.