The infusion by overseas investors marks their confidence on India’s grassroots loan market despite the headwinds amid the pandemic.
The funding from FMO will be used for on-lending to financial institutions that focus on women borrowers, micro-entrepreneurs and small enterprises, Northern Arc chief operating officer Bama Balakrishnan said.
Microfinance borrowers in both urban and rural areas will be key beneficiaries of FMO’s investment.
Earlier this fiscal, Northern Arc had received funds from the US International Development Finance Corporation and Asian Development Bank.
The latest transaction fits with FMO’s ambition to accelerate financial inclusion with a focus towards women-run businesses and SMEs, FMO’s chief investment officer Huib-Jan de Ruijter said. The Dutch entrepreneurial development bank has a committed portfolio of 9.7 billion euro spanning over 85 countries.
Northern Arc has enabled around Rs 95,000 crore of financing to its partner institutions. It is backed by marquee private equity players like Accion, Leapfrog, Affirma Capital (erstwhile Standard Chartered Private Equity), Dvara Trust, Eight Roads and Sumitomo Mitsui Banking Corporation.
Northern Arc Investments, a wholly-owned subsidiary of Northern Arc Capital, has delivered 15% return to its investors as it announced the closure of IFMR Impact Investment Fund, the first fund from its investment platform.
This was the first private credit fund from India launched in 2015 focusing on the microfinance sector. The fund raised Rs 100 crore from banks, insurance companies and high net worth individuals.
The fund’s investment portfolio comprised 13 companies, which in turn disbursed over 1 crore end-loans to the unbanked and underbanked segments.
This is the firms’ second exit from the investment platform in the last two years.
