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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

IA 50 2021 PROFILE

Northern Arc Investment
Managers Private Limited

Total Assets Under Management: $100 – 499M
Asset Class: Private Debt - Absolute Return / Notes
Primary UN Sustainable Development Goal: 1 – No Poverty
Affordable Housing & Community Development
Small/Medium Business Development
Microfinance, low-income financial services & micro-insurance

Firm Overview

Category: Private Equity - Other

Established in 2014, we are a leading financial inclusion focused private debt fund manager from India with over USD300 million in investor commitments. In line with the work and ecosystem created by our parent company Northern Arc Capital, we facilitate investments that ensure easy access-to-finance for companies which have a demonstrable track record in increasing the penetration of financial services in India.  Our investment strategy is centered around making impact-oriented yet returns-focused investments in a number of key financial-inclusion themed sectors, including Microfinance, Affordable Housing, Small Business Loans, Vehicle Loans, Agri-business Loans and Consumer Finance.  Over the years, we have significantly contributed towards deepening institutional investor participation (domestic as well as overseas investors) in the financial inclusion space in India through our funds, in line with our longstanding mission is to bring about reliable and sustainable access-to-finance for the unserved/underserved population in India.

Firm Headquarters: Asia & Oceania
Years of Operation: 5 – 9 years
Total Assets Under Management:
$100 – 499M
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: Less than 25%
Investment Thesis:

The role of private credit in the Indian impact investing space is quite subdued: over 90% of the impact investors in India target an equity strategy. We act as reliable and responsible providers of debt capital to institutions that ensure access-to-finance for the unbanked and underbanked in India.

Investment Overview:

Financial inclusion continues to be a significant need in India, especially in rural areas where financial access continues to be deficient. Despite several Government measures and external capital being channeled towards this objective, the size of the unbanked/under-banked population remains sizeable.  Impact investing has gained rapid pace in India especially over the past decade with several institutions having emerged, focusing on bringing social upliftment to the economically backward classes. There are also several impact focused funds operating in this space, with the objective of furthering the reach of these institutions. However, over 90% of the impact funds in India are focused on private equity, often leaving out debt capital – a vital capital component for these institutions – unmet.  We are one of the very few private debt players in India with a mission to provide reliable and responsible debt capital to institutions that ensure access-to-finance for the unbanked/underbanked segments.

Company Differentiator:
  1. One of the very few private debt fund managers operating in this space
  2. Several innovative measures to provide investor comfort including meaningful levels of first loss protection to mitigate credit risk; currency hedging services to counter exchange risk
  3. Unparalleled connect with high-quality onlending organisations across India
  4. Consistent and demonstrated track record in outperforming target returns across all funds
  5. End-to-end experience across the funds’ life cycle: fund-raising, investing and complete exit
  6. Proprietary social impact measurement tool to ensure transparency in impact reporting and measurement
  7. Internal process well integrated with ESG and UNSDGs
  8. High-touch operational model with portfolio entities with detailed post-investment monitoring at periodic intervals

Investment Example

We invest in a variety of financial inclusion themed sectors including Microfinance, Small Business Loan finance, Small Vehicle Loan finance, Agri-business finance, etc.  Microfinance, which follows the JLG principle in India is given exclusively to women entrepreneurs, thereby empowering them as bread-winners and have a greater say in household financial affairs. Kinara Capital, one of the several portfolio companies in the Small Business Loan sector provides collateral free loans to small businesses (especially in manufacturing-supply chain space), and was founded by a female entrepreneur, and also provides discounted loan pricing for women borrowers.  End-borrowers in our Vehicle Finance loans are often employee-turned-entrepreneurs who are often new to credit. 

Leadership and Team

Cumulative Leadership Experience in Investing:
30 years or more
Cumulative Impact Experience of Top Three Firm Leaders:
30 years or more
Ravi Vukkadala – Chief Executive Officer - Northern Arc Investments More Info

Ravi is the CEO of Northern Arc Investments and has over 16 years’ experience in credit investing, risk and fund management. Prior to joining Northern Arc, he was part of the Fixed Income investment team at Invesco Mutual fund overseeing credit and rates assessment. His capital market experience also includes stints with companies such as Bharti AXA Investment Managers, JM Financial Ltd, and Merrill Lynch. Ravi is a Chartered Financial Analyst (CFA Institute) & Financial Risk Manager (GARP) and holds a Post Graduate Diploma in Finance from NMIMS (Mumbai), Masters in Management & Information Systems from Virginia Tech (US) & Bachelor of Chemical Engineering from University of Mumbai.

Percentage of Investment Professionals who identify as women:
Less than 25%
Percentage of Investment Professionals who identify as a person of color:*
50% or more
Percentage of Senior Management Team who identify as women:
Less than 25%
Percentage of Senior Management Team who identify as a person of color:*
50% or more
*People of color include: Black, Latinx, Asian, Native American/Alaskan Native, Pacific Islander, Middle Easterm and multi-racial Americans

Financial Performance

Target Financial Returns Relative to Benchmark:
Market Rates
Actual Performance Relative to Target Financial Returns in the Past Three Years:
Over-delivered compared to initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
100%
Primary Impact Outcomes:
Alleviating poverty
Creating jobs
Increasing access to financial services
Secondary Impact Outcomes:
Increasing access to education and improving educational outcomes
Increasing access to water and sanitation
Providing housing
Value-added Services Offered:
Access to markets
Business and legal training
Financial literacy training

Investments systematically target companies where social and/or environmental impact is integral to the product/service being created:

All our investments are made in institutions that have a stated focus to ensure providing access-to-finance to individuals and households that are unbanked/under-banked. Our portfolio companies have operations spread across India, especially in tier 2/tier 3 towns and cities where financial literacy and reach tends to be lower, and also target segments that are usually overlooked by formal channels of finance due to lack of size/scale, proper documentation & records, higher risk profile, etc. Depending on borrower behaviour and vintage, a few of our portfolio entities also assist by providing additional value-added products and services (e.g. insurance) to ensure that the beneficiaries benefit from these offerings and remain financially aware and protected.

Investments systematically include social and environmental sustainability practices in the due diligence process:

As part of the pre-investment due diligence process, our investment team monitors a number of key ESG parameters (both quantitative and qualitative) such as transparency of communication, adherence to fair practice norms, employee welfare and benefits, fair policies and practices, policies against financing harmful activities, environmentally friendly operations, etc.

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes – to investors and donors
Third Party Validations:
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing

Learn More

Key Contact Name: Cyril Paul
Phone: 992-067-6610
Mailing Address:

The Capital, 902 – B Wing Plot No C- 70, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, India

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