Northern Arc Capital IPO: Important Things to Focus on

Northern Arc Capital Limited IPO is offering a 100% book-built public issue. This upcoming IPO is offering a fresh issue worth up to Rs 500 Crore equity shares. The face value is reported as Rs. 10 for each share. This new IPO issue is being made through the book-building process with a reservation of not more than 50% of the new offer reserved for Qualified Institutional Investors, not less than 15% reserved for NII and the remaining 35% or more reserved for Retail Individuals. Application for public issue and subscription opening/closing dates and other important dates will be announced soon; however, keep in mind that the public offering is proposed to be listed on both the exchanges, i.e. NSE and BSE.

About the Company

Northern Arc Capitals Limited is a diversified financial services platform, was established primarily to address the varied retail credit needs of underserved households and businesses in India, with the goal of removing plagiarism. According to the CRISIL Report, they are one of the leading players amongst India's diversified NBFCs in terms of Assets under Management as of March 31, 2023, with a business model diversified across offerings, sectors, products, geographies and borrower categories. The retail credit market in India was ₹60 trillion as of Fiscal 2023 and has rapidly grown at a CAGR of 14.3% during Fiscals 2018 and 2023 (Source: CRISIL Report).

Objectives of the Public Offering

Each Selling Shareholder will be entitled to the proceeds from the sale of their respective Offered Shares in the Offer for Sale, net of their share of the Offer-related expenses. The company will not be getting any proceeds from the Offer for Sale. Furthermore, the Objects of the Fresh Issue proposes to utilize the Net Proceeds to meet future capital requirements for onward lending. The company expects to receive the benefits of listing shares in exchange for the enhancement of the company's brand name. The company's objectives set aside in the Memorandum of Association are mentioned in the DRHP and are filled by the company, which enables them to continue current operations and fundraise for new activities.

Financials of the Company

In the period ended on March 31, 2023, the company's assets were reported as Rs 9371.57 Crore, a notable increase of approximately 17.50% from the previous year's Rs 7974.11 Crore. Revenue has also increased and can be seen in substantial growth, reported Rs 1304.97 Crore, representing a significant rise of about 43.54% compared to the prior year's Rs 909.53 Crore. The profit after tax for the same period amounted to Rs 242.21 Crore, showing an increase of approximately 33.15% from the previous year's Rs 181.93 Crore. Moreover, the total borrowing in the period ended on March 31, 2023, was Rs 7034.56 Crore, indicating a rise of around 17.47% from the previous year's Rs 5982.95 Crore.

Lead manager, Registrar of IPO & Promoters of the Company

The IPO is managed by ICICI Securities Limited, Axis Capital Limited and Citigroup Global Markets India Private Limited, which is the book-running lead manager of this public issue. Meanwhile, KFin Technologies Limited has been appointed as the registrar for the issue. The company said that they do not have an identifiable promoter - mentioned in DRHP.