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Northern Arc Capital, a non-bank financial institution, launched its initial public offering (IPO) on September 16th, seeking to raise Rs 777 crore. The IPO, which is a combination of a fresh issue of equity shares and an Offer For Sale (OFS) by existing shareholders, attracted strong investor interest on its first day. The issue was subscribed 3.06 times, with the non-institutional investors category receiving 4.65 times subscription and the retail individual investors (RIIs) category garnering 4.07 times subscription. The qualified institutional buyers (QIB) category, however, saw only 2 per cent subscription.
The IPO, which will remain open for subscription until September 19th, is expected to be finalized on September 20th, with the shares being listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) on September 24th. The price band for the IPO has been fixed at Rs 249 to Rs 263 per share. The grey market premium (GMP), an unofficial indicator of investor sentiment, is currently trading at Rs 175, suggesting a potential listing gain of 66.54 per cent.
Several brokerage houses have given a 'subscribe' recommendation for the IPO, citing Northern Arc Capital's strong track record in the financial inclusion space. Anand Rathi highlights the company's significant contribution to the Indian retail credit market, facilitating financing of over ₹1.73 trillion since 2009. Nirmal Bang emphasizes Northern Arc Capital's well-positioned growth potential, leveraging its sector expertise, digital platforms, and strong partner ecosystem. SBI Securities also recommends subscribing to the issue, noting the company's robust ecosystem and fair valuation compared to its peers. The anchor investors, who invested Rs 229 crore in the IPO prior to its public launch, include prominent names like SBI General Insurance Company, SBI Life Insurance Company, and Goldman Sachs.
Proceeds from the fresh issue will be used to meet future capital requirements for onward lending. Northern Arc Capital, registered with the Reserve Bank of India (RBI) as a systemically important non-deposit taking non-banking finance company (NBFC), has been operating in the financial inclusion space for over a decade. Its business model is diversified across offerings, sectors, products, geographies, and borrower segments, providing access to credit to underserved households and businesses through its Originator Partners. Despite facing a challenging economic environment and regulatory scrutiny, Northern Arc Capital has demonstrated resilience and growth in recent years, making it an attractive proposition for investors seeking exposure to the burgeoning financial inclusion sector in India.
Source: Northern Arc Capital IPO: Should You Apply? Check Subscription Status, GMP, Review