Northern Arc Capital raises $25 million through ECBs from Proparco

Investors

An external commercial borrowing deal for $25 million between Northern Arc Capital and Proparco has been completed, according to the financial services platform in India with the most varied offerings.

The AFD Group is a public financial institution owned by the French government that carries out France’s policy on worldwide solidarity and development by funding initiatives that contribute to a more just and resilient world.

Northern Arc will use the money to support women business owners and MSMEs, especially in the following billion people. With the help of partners and directly, the funds will be utilized to provide these consumers with unique financing solutions.

The facility’s lengthy lifespan will give Northern Arc the freedom to serve these clients with a variety of solutions. For almost 21,000 micro borrowers and MSMEs in India, the Proparco grant will boost access to lending. According to estimates, the initiative will assist in the preservation of 34,000 jobs.

The project qualifies for the 2X Challenge, a worldwide gender finance program to which Proparco has contributed since its founding in 2018. This is because the project has had significant effects on women entrepreneurs. The Project also targets SDGs 5 (Gender Equality), 8, and 10 (Decent Work and Economic Growth) (Reduced Inequality).

Through its digital n-POS platform, which enables NBFCs, fintech, digital lenders, and investors to co-lend to retail borrowers, Northern Arc services these important consumer categories.

The platform offers completely integrated systems for partners and investors, along with capabilities for quick distribution and real-time KYC certification. Additionally, it gives investors access to the NAC score, a credit score created by Northern Arc that is based on an evaluation of a borrower’s financial stability and likelihood to repay.

The scoring makes use of AI and ML algorithms and analyzes more than 25 million data points that Northern Arc has gathered throughout its ten-year collaboration with more than 250 partner institutions nationwide. Investors can reconcile their portfolios and receive periodic reports with the aid of the n-POS platform.

Diane Jegam, Regional Director – South Asia, Proparco, said, “We are very pleased to partner with an institution like Northern Arc which has been working for Financial Inclusion in India for more than a decade. The Company’s mission to enable access to finance for the underbanked in an efficient, scalable, and reliable way is in line with Proparco’s Financial Inclusion strategy in India. Northern Arc’s role as a bridge between originators serving financially excluded customer segments and debt capital market with the use of technology creates multiplier impacts.”

Commenting on the ECB Transaction, Ashish Mehrotra, MD & CEO of Northern Arc Capital, said, “This transaction is proof of Northern Arc’s ability to forge partnerships with and attract funding from reputed global DFIs. We are excited to partner with Proparco to cater to the diverse financial requirements of the next billion and emerging segments. The usage of proceeds will be towards enabling the next billion customers to access financial services directly through digital channels as well as serving them through partnerships.”

Additionally, Northern Arc has raised money from a variety of reputable foreign investors over the past three years, including USDFC, ADB, FMO, Calvert Impact Capital, and JICA.

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