Northern Arc Capital plans to raise funds in pre-IPO round

Mumbai: Northern Arc Capital, earlier known as IFMR Capital, is looking to raise funds through a private round, ahead of its plans to go public, said two people aware of the development.

“The financial services company is planning to raise fresh capital from private markets ahead of its planned initial public offering (IPO). They are expected to soon start a formal process for the same. They could raise around a couple of a hundred crores at least in this round,” said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.

IFMR Capital rebranded itself as Northern Arc Capital in February this year. Established in 2008, the company connects non-banking financial companies working among financially excluded households and businesses with investors in existing and emerging debt capital markets. The company also has an asset management business, which invests in debt instruments of these companies, and has assets worth Rs850 crore.

Mint reported in January that the company was in talks to appoint investment banks for an IPO. Emails sent to Northern Arc Capital did not elicit any response.

Several IPO-bound companies have raised funds through pre-IPO financing in recent months. In November, Mint reported that funds worth almost $600 million was raised by IPO-bound companies in 2017. The activity was led by large deals such as the $383 million funding round by a consortium of investors led by Warburg Pincus in ICICI Lombard General Insurance Co. Ltd and IIFL Special Opportunities Fund’s $60 million bet on Reliance Nippon Life Asset Management Co. Ltd.

Several public markets-focused institutional investors such as hedge funds, family offices and high net-worth individuals, too, have tapped pre-IPO financing opportunities.

In September, Mint reported that Prataap Snacks Ltd had raised Rs50 crore in a pre-IPO round from public market investor Malabar Investments. The following month, Mint reported that private equity firms Aditya Birla Private Equity and Multiples Alternate Asset Management had sold part of their stakes in IPO-bound Indian Energy Exchange Ltd to several high net-worth individuals and SBI Life Insurance Co. Ltd.

Northern Arc Capital is backed by PE firms Eight Roads Capital and Standard Chartered Private Equity (SCPE).

In December 2016, SCPE announced an investment of $17 million in Northern Arc Capital, with a commitment to increase it further to a total of $50 million. In November 2016, the company raised a $25 million investment from Eight Roads Ventures, the proprietary investment arm of Fidelity International Ltd.livemint

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