Northern Arc arranges Rs 220-crore debt for Asirvad from German fund

Funds will be disbursed to Asirvad in three stages of which euro 5 million has already been disbursed.

Debt financier Northern Arc Capital on Monday announced that it has arranged an external commercial borrowing (ECB) worth nearly Rs 220 crore (25 million euro) for Asirvad Microfinance, an institution backed by Manappuram Finance. The ECB was subscribed by Germany-based social impact fund, Invest in Visions GmbH. Invest in Visions was advised on the transaction by investment manager Agents for Impact GmbH.

Funds will be disbursed to Asirvad in three stages of which euro 5 million has already been disbursed. It will be utilised by Asirvad to address the liquidity shortage faced by women borrowers from lower-income households.

In the last five months, Northern Arc has facilitated a total of Rs 500 crore worth of loans for Asrivad from a wide range of investors, including PSBs, multinational banks, SFBs domestic and international DFIs.

Bama Balakrishnan, COO of Northern Arc Capital, said: “Some of the largest financial institutions in the country benefit from our product structuring expertise and wide investor network. We have been working extensively with Asirvad during the crisis and this deal is the cherry on the cake, providing longer-term reputational and access benefits apart from longer-term liquidity.”

Asirvad till date has disbursed over Rs 20,000 crore to over 1.5 crore customers from low-income segments of India. Asirvad has diversified its borrowing profile and could raise liabilities over the last five months under various schemes, including TLTRO and PCG announced by the finance ministry. The latest debt raise from a global investor will further strengthen its liabilities strategically, according to Northern Arc.

Raja Vaidyanathan, MD and CEO of Asirvad MFI, said, “We are grateful for the support we have received from Invest in Visions and Northern Arc on this transaction. These funds will help Asirvad in furthering our mission of creating an inclusive India, by extending credit to micro borrowers. As India continues to weather the unprecedented Covid-19 pandemic, Asirvad’s main focus will be to empower women in under-served regions.”

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