Northern Arc, a non-banking financial company in India, on Monday, said it has launched its performing credit AIF fund (Category II) – ‘Finserv Fund’ through its subsidiary, Northern Arc Investment Managers (NAIM), with a target corpus of Rs 1500 crore ($178.7 million).
The fund includes a green shoe of Rs 500 crore.
The vehicle is focused on six sectors including MSME, affordable housing, vehicle finance, agriculture finance, microfinance and consumer finance.
The fund’s investment strategy focuses on higher risk-adjusted returns and regular investor cash flows by investing in a diversified pool of debt securities of financial institutions to support their growth.
Northern Arc manages Assets Under Management (AUM) of Rs 146,390 million through its balance sheet and active AIF funds as of June 30, 2024. The firm is backed by Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE (formerly known as IIFL), Accion, Augusta Investments (known as Affirma Capital), Dvara Trust, and Eight Roads (a proprietary arm of Fidelity).
NAIM claims that it has had four successful fund exits that have provided net fund returns of 11.72%-15.77% post-expense pre-tax, without any delays and defaults.
“The Finserv Fund will invest in a well-diversified portfolio across 45-55 entities within our key sectors. This fund targets gross returns of 14.00-14.50% XIRR over its four-year tenure, with a deployment period of about six months from the final close,” Bhavdeep Bhatt, Chief Executive Officer of Northern Arc Investments, said.
