| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 249 to ₹ 263 | 57 | 16th Sep, 2024 – 19th Sep, 2024 | ₹777.00 Cr |
About Northern Arc Capital Ltd IPO
Northern Arc Capital Ltd. is a diversified financial services platform set up primarily to cater to the diverse retail credit requirements of the under-served households and businesses in India. Over the last 15 years, the company’s approach has been to create a differentiated and comprehensive play on the retail credit ecosystem in India spread across sectors. According to the CRISIL Report, the company is among India’s diversified NBFCs in terms of AUM as of March 31, 2024, with a business model diversified across offerings, sectors, products, geographies and borrower categories. Further, the company has one of the lowest industry-wide credit costs amongst diversified NBFCs in India as of March 31, 2024. The company has also developed domain expertise in enabling credit across focused sectors in India: MSMEs financing, microfinance (MFI), consumer finance, vehicle finance, affordable housing finance and agricultural finance. The retail credit market in India was Rs. 75.2 trillion as of FY24 and has rapidly grown at a CAGR of 16.0% during FY20 and FY24. The company caters to this retail credit market through a multi-channel approach that includes (i) Lending, Intermediate Retail Lending and Direct to Customer Lending either in collaboration with Retail Lending Partners or through a branch network to offer rural finance and MSME lending, with AUM of Rs. 117,100.19 million across 671 districts, 28 states and seven union territories in India, as of March 31, 2024; (ii) enabling credit for Originator Partners through various financing products Placements, with aggregate Placements volume of Rs. 1,019,039 mn, as of March 31, 2024; and (iii) Fund Management, with aggregate fund deployed of Rs. 120,786 mn across ten alternate investment funds (AIFs) and three portfolio management service (PMS) funds, as of March 31, 2024. The company has built an efficient and scalable business model supported by its proprietary end-to-end integrated technology product suite customized to multiple sectors.
Objective of the Northern Arc Capital Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- Gross proceeds of the fresh Issue proposes to utilize the Net Proceeds to meet future capital requirements towards onward lending;
- General corporate purposes.
Rationale To Invest In Northern Arc Capital Ltd IPO
Wide addressable and underpenetrated market provides ample growth opportunities
The market for non-banking financial companies (NBFCs) in India is poised for significant growth, driven by affordable data access, digital transformation, and an underpenetrated customer base. NBFCs have generally been able to address this opportunity due to their strong origination skills, extensive reach, better customer service, faster processing, streamlined documentation requirements, digitization of customer onboarding process, customized product offerings, local knowledge, and differentiated credit appraisal methodology. The rapid evolution of Fintechs over the last few years has added another dimension to the market served by NBFCs and has fueled rapid growth across the landscape. Moreover, the Indian retail credit market has grown steadily over the last few years and is expected to grow at a CAGR of 17-18% between FY24 and FY26 to reach Rs. 100.9 trillion by FY26. (Source: CRISIL). The company believes that this presents an opportunity to capitalize on the significant potential for growth in the retail credit market, particularly in the rural and semi-urban areas. By leveraging the company’s diversified business model and proprietary technology product suite customized to multiple sectors, it has developed strong sectoral expertise over the last 15 years in enabling credit across focused sectors. We, thus, believe that the company has further solidified its role in facilitating credit across these sectors, positioning itself as a key player in India’s rapidly growing retail credit market.
Large ecosystem of partners, data, and technology platforms create strong network effects
The company’s technology products and data capabilities are the backbone of the ecosystem, which ensures seamless interaction between Originator Partners, Retail Lending Partners, and Investor Partners, facilitated through the technology platform Nimbus, which enables end-to-end processing of debt transactions. To deepen relationships with Originator Partners, the company has developed a proprietary technology product, Nu Score, a tailored machine learning-based scoring module designed to assist Originator Partners in the loan underwriting process and help them make effective credit decisions. Further, to enable technology-backed seamless co-lending across a network of Retail Lending Partners and Investor Partners, the company has developed nPOS. This fully integrated API-based technology solution seamlessly integrates with the systems of Originator Partners (including Retail Lending Partners) and Investor Partners, easing the co-lending process. In addition, AltiFi, an alternative retail debt investment platform, enables them to capture a broader base of retail investors, who may subsequently graduate to invest in funds. These multi-channel offerings, supported by proprietary technology and data capabilities, enable funding to the end customer and aid Originator Partners, Retail Lending Partners and Investor Partners, and AltiFi investors in expanding their outreach and accessing new debt capital pools and investment opportunities. This synergy and seamless integration create a ‘flywheel effect’, which gets accentuated with more transactions and incremental data flow. This technology-driven ecosystem strengthens the company’s competitive positioning, providing a sustainable advantage in the financial ecosystem.
Valuation of Northern Arc Capital Ltd IPO
Northern Arc Capital Ltd. has a diversified financial services platform set up primarily to cater to the diverse retail credit requirements of India’s under-served households and businesses. The company has expertise in lending across various focus sectors in India, especially in micro, small, and medium enterprise (MSME) finance, microfinance (MFI), consumer finance, vehicle finance, affordable housing finance, and agriculture finance. The company has maintained a well-diversified funding profile underpinned by established relationships with lenders and investors, a proactive liquidity management system and a strong credit rating. The company has a diversified base of lenders (including various banks, offshore financial institutions and NBFCs), and investors provide a strong base for increased funding. On the financial front, Northern Arc is among India’s diversified NBFCs in terms of AUM as of March 31, 2024, with a business model diversified across offerings, sectors, products, geographies and borrower categories. The company’s differentiated credit underwriting processes and risk models have helped deliver strong asset quality. Northern Arc’s risk models are supported by a substantial data repository comprising over 35.17 million data points, as of March 31, 2024, on portfolios across multiple sectors assessed throughout the journey and qualitative field-level insights that aid credit assessment and monitoring. According to the CRISIL Report, the company had one of the lowest gross non-performing assets (“GNPA”) of 0.45% and net non-performing assets (“NNPA”) of 0.08% as of FY24. The issue is valued at a P/BV of 1.49x on the upper price band based on FY24 book value, which is fairly valued. We, therefore, recommend a Subscribe rating for the issue on the back of a differentiated credit underwriting process, which keeps their asset quality strong and risk-adjusted returns consistent across business cycles.
What is the Northern Arc Capital Ltd IPO?
Northern Arc Capital IPO is a book built issue of Rs 777.00 crores. The issue is a combination of fresh issue of 1.9 crore shares aggregating to Rs 500.00 crores and offer for sale of 1.05 crore shares aggregating to Rs 277.00 crores. . Login to your account now.
How to apply for the Northern Arc Capital Ltd IPO through StoxBox?
To apply for the Northern Arc Capital Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Northern Arc Capital Ltd IPO open?
Northern Arc Capital Ltd IPO is opening on 16th September 2024. Apply Now
What is the lot size of the Northern Arc Capital Ltd IPO?
The Lot Size of Northern Arc Capital Ltd IPO is 57 equity shares. Login to your account now
When is the Northern Arc Capital Ltd IPO allotment date?
The allotment Date for Northern Arc Capital Ltd IPO is 20th September 2024. Login to your account now.
When is the Northern Arc Capital Ltd IPO listing date?
The listing Date for Northern Arc Capital Ltd IPO is 24th September 2024. Login to your account now
What is the minimum investment required for the Northern Arc Capital Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,991. Login to your account now
. What is the maximum investment allowed for the Northern Arc Capital Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 194,883. Login to your account now
What are the risks associated with investing in the Northern Arc Capital Ltd IPO?
- The company’s operates a diversified business model that exposes them to various risks. An inability to manage such risks may have an adverse effect on the business, results of operations, cash flows, and financial condition.
- If the company borrowers’ default on their repayment obligations, this may lead to increased levels of non-performing assets (NPA), related provisions, and write-offs and adversely affect the business, results of operations, cash flows, and financial condition.
- A significant portion of investments are in credit facilities and debt instruments that are unsecured and/or subordinated to other creditors. An inability to recover such investments may result in increased NPAs, which could adversely affect business prospects, results of operations, cash flows, and financial condition.
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When will the Northern Arc Capital Ltd IPO shares be credited to my Demat account?
The Northern Arc Capital Ltd IPO be credited to the account on allotment date which is 23rd September 2024. Login to your account now
Where can I find the Northern Arc Capital Ltd IPO prospectus?
The prospectus of Northern Arc Capital Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Northern Arc Capital Ltd IPO?
| IPO Open Date | Monday, September 16, 2024 |
| IPO Close Date | Thursday, September 19, 2024 |
| Basis of Allotment | Friday, September 20, 2024 |
| Initiation of Refunds | Monday, September 23, 2024 |
| Credit of Shares to Demat | Monday, September 23, 2024 |
| Listing Date | Tuesday, September 24, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 19, 2024 |
