Northern Arc and CDC tie-up for pool bond issuance of Rs 320 cr to support six MFIs, BFSI News, ET BFSI
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CDC’s Rs 320 crore investment in a pool of senior secured NCDs will provide systemic liquidity to six leading microfinance companies: Annapurna Finance, Arohan Financial Services, ASA International, Asirvad Microfinance Limited, Chaitanya India and Fusion Microfinance.
The investment is expected to support MFIs in providing over 630,000 new micro-loans to low-income households.
Srini Nagarajan, Managing Director and Head of Asia at CDC, said: “This exciting partnership with Northern Arc marks CDC’s first Pooled Bond Issuance in India, and comes at a time when systemic liquidity is critically needed to mitigate the impact of COVID-19 on vulnerable population in India. We are pleased that our investment will facilitate access for small businesses and will especially ensure that more women in India have improved access to finance, helping to uplift their livelihoods, households and communities.
The PBI product, developed by Northern Arc, pools together for one investor a set of debentures issued by diverse entities. These debentures are partially guaranteed by Northern Arc. For this transaction, Northern Arc worked with CDC through a virtual due-diligence process that covered all six entities, and to structure a product that meets the risk and return requirements of the investor.
Dr Kshama Fernandes, Chief Executive Officer of Northern Arc Capital said: “Northern Arc’s forte has been to introduce impact sectors to investors through its innovative products and structures. CDC’s first investment in a Pooled Bond Issuance in the microfinance sector in India is testament to this. The structure has enabled originators to efficiently access a global DFI and avail long tenor debt on their balance sheet. We see this as a beginning of a long-term partnership that will enable our clients to raise capital through cycles.”
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