Northern Arc raises $10m in ECB financing from Calvert Impact

Northern Arc Capital, formerly known as IFMR Capital Finance, a non-banking finance company (NBFC) that provides access to debt for under-banked individuals and businesses, announced that it has raised $10-million debt from US-based-Calvert Impact Capital, one of the world’s leading impact investors via external commercial borrowing (ECB).

This is Calvert Impact Capital’s largest debt investment in India so far. Northern Arc will deploy the funds towards on-lending to financial institutions as well as lending directly to retail customers and to mid-market corporates.

Underbanked customers, including low-income households and small businesses, to whom credit has dried up over the last few months due to the pandemic, will be a key beneficiary of the proceeds.

These borrowers will be served both directly by Northern Arc as well as through on-lending to partner institutions. Similarly, high-quality NBFCs, early-stage businesses, and small and medium enterprises (SMEs) that have strong business models but are facing liquidity crunch will also benefit from this financing.

Bama Balakrishnan, COO, Northern Arc, said, “The partnership with Calvert Impact Capital is long-term & multi-dimensional, helping both organisations achieve common goals across impact and growth. These include aiding small businesses and promoting gender equity, a cause that is strongly endorsed by both organizations…”

Calvert Impact Capital invests to create a more sustainable and equitable world. Their portfolio is crafted to serve sectors, geographies and populations that are often overlooked or underserved by traditional capital markets. The latest investment in Northern Arc is well-aligned with Calvert Impact Capital’s focus on increasing the flow of private capital to create positive social and environmental impact.

Daniel Ford, investment officer, Calvert Impact Capital, said: “Northern Arc has been instrumental to strengthening Indian debt capital markets to the benefit of organizations serving underbanked populations. Today more than ever, these companies and their clients benefit from access to a diversity of funding sources and the relationship-based approach of the Northern Arc model. As an investor, we benefit from leveraging the market and credit expertise of the Northern Arc team as we put capital to work for impact in India.”