NARC (IFC-47395)

Regions
  • South Asia
Geographic location where the impacts of the investment may be experienced.
Countries
  • India
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Approved
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Dec 20, 2023
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Northern Arc Capital Limited
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Agriculture and Forestry
  • Construction
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Equity, Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 80.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Loan Amount (USD)
$ 40.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Project Cost (USD)
$ 80.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Mar 30, 2024

Disclosed by Bank Feb 7, 2024

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

As stated by the IFC, the proposed project entails (i) an equity investment of up to US$40 million and (ii) a senior debt investment of US$40 million in Northern Arc Capital Limited (NACL). Northern Arc is non-banking financial company which serves the micro, small and medium enterprise (MSME), affordable housing finance and agricultural finance segments, directly (through partnerships and co-lending) and through its institutional partners (primarily financial institutions).
In addition, NACL has a fund management business (through its wholly owned subsidiary) and a placements business through its technology platform that provides a variety of services and products to participants involved with the Indian debt market. As of March 2023, Northern Arc had assets under management of US$1.1 billion and a domestic credit rating of AA- (Stable) by ICRA and India Ratings. IFC’s investment support will strengthen the Company’s capital and accelerate its lending to the MSME segment.  

Key financial products include working capital financing, and short- and medium-term loans catering for agricultural finance, vehicle finance and MSME sectors. Within structured finance and placement business, the Company undertakes loan securitization, debt placement, commercial paper, and credit enhancement. Some of the sectors of direct and indirect exposures include supply chain (agri, pharma, electronics, metals), warehouses, renewable sector such as solar power projects, battery manufacturing, electronic vehicles, EV infrastructure (battery swapping) etc.

Early Warning System Project Analysis
For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

As stated by the IFC, the Company and its subsidiaries will avoid investments in financial intermediaries other than low-medium risk. Hence, the E&S risk of the proposed investment is medium, and the project is categorized as FI-2 according to IFC's Policy on Environmental and Social Sustainability. 

Investment Description
Here you can find a list of individual development financial institutions that finance the project.
Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

According to the IFC, as of March 2023, on a fully diluted basis, 360 ONE Funds were collectively the largest shareholder with a stake of 25.61% in Northern Arc, followed by Leapfrog Financial Inclusion India (II) Ltd (22.56%), Augusta Investments II Pte. Ltd (19.5%), Eight Roads Investments Mauritius II Limited (formerly known as FIL Capital Investments (Mauritius) II Limited) (10.25%), Dvara Trust (7.48%), Accion Africa-Asia Investment Company (5.80%), SMBC (5.28%) and others (3.52%).

Northern Arc is headquartered in Chennai, India and has a pan-India presence, including through its lending partners


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

General IFC Inquiries - IFC Communications:

Address: 2121 Pennsylvania Avenue, NW, Washington DC 20433
Telephone: +1 202-473-3800
Fax: +1 202-974-4384

Financial Intermediary - Northern Arc Capital Limited:

Saurabh Jaywant
Email: Saurabh.jaywant@northernarc.com

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries

If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.

ACCOUNTABILITY MECHANISM OF IFC/MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

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How it works