IPO Synopsis
IPO Synopsis:
Northern Arc Capital Ltd filed its DRHP with SEBI on 15th July, 2021. The issue comprises of a fresh issue of Rs.300 crores and an offer for sale of up to 36,520,585 equity shares. A pre-IPO placement of Rs.150 crore is also being considered by the company.
The book running lead managers to the issue are IIFL Securities, Axis Capital, SBI Capital Markets and Credit Suisse Securities.
Objectives of the issue:
The main objective of the offer is to augment the capital base of the company and for general corporate purposes
About Northern ARC Capital Ltd
Northern Arc Capital, established in 1989, is an NBFC that primarily focuses on catering to the credit requirements of the under-served households and businesses and provide them with debt finance. They are one of the leading players in the India’s diversified NBFCs. Northern Arc operates in sectors like microfinance, MSME finance, vehicle finance, consumer finance, affordable housing finance etc.
Since the company started, the company has raised over Rs.9,500 billion in funds for their clients. The company has 3 primary offerings-
1. Financing: Lending to under served households and businesses, lending to mid market companies
2. Syndication and structuring
3. Fund management- This is done through their subsidiary Northern Arc Investment Managers Pvt Ltd
Since their inception, they have been able to impact over 54.21 million lives and 42 million of them are women. The NBFC has executed more than 900 structured finance transactions and have built partnerships with 228 orginator partners. They also have relationships with 400 Investment Partners across various investment classes.
Northern ARC Capital Ltd Financial Status
Financials:
|
Particulars (In Rs cr) |
FY21 |
FY20 |
FY19 |
|
Revenue |
681.17 |
632.82 |
601.55 |
|
PAT |
76.6 |
102.93 |
115.41 |
|
EPS (In Rs) |
5.35 |
7.92 |
10.91 |
|
Particulars (In Rs cr) |
FY21 |
FY20 |
FY19 |
|
Total Assets |
5,697.16 |
4,597.5 |
4,277.99 |
|
Total Borrowings |
3,932 |
2,921.5 |
2,925 |
|
Equity Share Capital |
87.92 |
87.47 |
78.34 |
Peer comparison:
|
Firm Name |
Total AUM (INR cr) |
Year of incorporation |
|
Anicut Capital |
1,500 |
2015 |
|
Centrum Alternatives |
650 |
2017 |
|
Northern Arc Investments |
2,000 |
2014 |
|
Vivriti Asset Management sa |
236 |
2017 |
The Key points are-
IPO Key Points
-
Strengths
1. The NBFC has a growing and highly diversified base of Originator Partners and Investment Partners, spread across various sectors
2. Their proprietary technology system called Nimbus helps increase their business opportunities and also helps increase efficiency
3. They are highly diversified in terms of geography, offerings, products and borrower segments
4. They have developed and fine-tuned their risk management process over the decades that they have been operational
-
Risks
1. Any disruptions in the NBFC’s fund sources will materially affect the operations of the business
2. Northern Arc is exposed to very high risk borrowers and if there are any large scale defaults in this sector, it will adversely affect the financials and operations of the company
3. The microfinance sector in India is very highly regulated and if there are any negative developments in this sector it will affect the business
4. It is probable that the fund management business may face additional risks
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