Latest news with #NorthernArc
Business Standard
30-07-2025
- Business
- Business Standard
Northern Arc Capital drops after Q1 PAT slumps 13% YoY to Rs 81 cr
Northern Arc Capital declined 4% to Rs 235.25 after the company's consolidated net profit fell 13.31% to Rs 81.05 crore despite of 4.79% jump in revenue from operations to Rs 6054.33 crore in Q1 FY26 over Q1 FY25. Profit before tax (PBT) fell 15.46% YoY to Rs 1043.65 crore in Q1 FY25. Net Interest Income (NII) grew by 10% YoY to Rs 298 crore in Q1FY26. Lending asset under management (AUM) jumped 12% YoY to Rs 13,351 crore as on June 30, 2025. Credit cost was Rs 102 crore for Q1FY26, registering the growth of 99% compared to Rs 51 crore in Q1FY25. As on 30th June 2025, gross NPA ratio was 1.13% while Net NPA ratio was 0.56% and provisioning coverage ratio on stage III assets was 50%. Capital adequacy ratio stood at 25.5% as on 30th June 2025. MD & CEO Ashish Mehrotra said, FY25 was a challenging year for the lending industry, but we enter FY26 with cautious optimism. Early signs of recovery are emerging, driven by strengthening macro fundamentals in the form of rising consumption, increased corporate capex, and a favourable monsoon outlook, alongside a regulatory push toward improved liquidity through rate cuts and a gradually normalizing credit environment, especially in the MFI segment outside Karnataka. At Northern Arc, our fee-based businesses continue to gain momentum, with core fee income growing 24% YoY against a 12% balance sheet expansion reflecting our strategic focus on building a solutions-led credit ecosystem. Excluding rural finance, where exposure remains calibrated, AUM grew 20% YoY. In rural finance, asset quality is stabilizing, with 0+ PAR reverting to March 2024 levels at 0.5%. We expect growth momentum to strengthen in the second half, supported by an improving credit cycle and liquidity. Northern Arc Capital is a leading diversified non-banking financial company (NBFCs), offering a comprehensive suite of solutions including lending, placements, and fund investments in key sectors like MSME Financing, MFI, consumer financing, vehicle financing, affordable housing financing, and agricultural supply chain finance.
Economic Times
28-07-2025
- Business
- Economic Times
Rs 1 crore in 2017 would have grown meaningfully today: Northern Arc CEO on consistent credit AIF returns
Agencies Bonds offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution. In a financial landscape often dominated by volatile equities and underwhelming traditional debt products, credit-oriented Alternative Investment Funds (AIFs) have quietly carved a niche of stability and performance. In this edition of ETMarkets AIF Talk, Bhavdeep Bhatt, CEO of Northern Arc Investments, shares why credit AIFs — when backed by strong underwriting, sectoral expertise, and data-driven risk frameworks — have delivered consistent double-digit returns over the years. Bhatt points out that an investment of ₹1 crore in Northern Arc's flagship fund back in 2017 would have grown significantly today, with no instances of default or capital erosion. As India's bond market deepens and fixed income finds renewed favour in a softening rate environment, Bhatt makes a strong case for investors to explore this lesser-known but resilient asset class. Edited Excerpts – Q) Take us through the performance of the funds for the month of June. On a yearly basis, the fund has clocked over 12% return, PMS Bazaar data showed. It has been a steady performer since inception. Tell us how much wealth one would have maintained if he/she invested Rs 1 cr. at the launch of the fund back in 2017? A) At Northern Arc Investments, we have been in the business of credit AIFs and PMS for over a decade. Our track record reflects consistent and disciplined fund performance. Over the years, we've successfully exited six AIFs, delivering a gross XIRR of 14.57% on the matured notable is that across these funds, there has not been a single rupee loss or even a single day's delay in payout or fund every matured fund has seen the weighted average exit rating of the portfolio improve by at least one notch compared to the entry-level rating, an indication of both portfolio quality and prudent risk management. This disciplined approach has translated into strong and steady returns. As seen in recent PMS Bazaar data, our fund has clocked over 12% annual return, continuing its consistent performance since inception. An investor who had committed ₹1 crore at the launch of the fund back in 2017 would have witnessed meaningful wealth creation over this journey. Q) What is the investment objective? A) Our focused objective has always been Financial Inclusion and Risk-Adjusted Returns. Our investment approach aligns both with market opportunity and developmental impact. Each of our funds is crafted with a focused yet diversified example, Fund 4 is designed to invest in a broad pool of securities from sectors such as microfinance, affordable housing finance, small business loans, commercial vehicle finance, and agri-business broader objective is not just return generation but also to promote financial inclusion in the other hand, Fund 8 is tailored to invest in institutions that provide credit to microfinance institutions, small business finance companies, vehicle finance companies, corporates, and agri-business lenders—with the clear goal of earning higher risk-adjusted returns. Q) How do you manage risk in the fund? A) Risk management lies at the heart of everything we do. Our framework is built around what we call the High Touch, High Tech, and High Test model. High Touch: Within the Northern Arc ecosystem, a 35-member risk team evaluates financial, business, and governance risks. This includes regular site visits at the time of onboarding and throughout the investment tenure. Our underwriting guidelines are sector-specific, and we place significant emphasis on a company's ability to service debt from operating cash flows. We consciously avoid bullet repayment structures and holding company frameworks. High Tech: At the core of our tech-led risk framework is a comprehensive data lake capturing high-frequency data from our portfolio companies. Our proprietary analytics tools built on this this data infrastructure helps us identify patterns, interpret and forecast sectoral and geographic trends in credit origination and credit performance effectively. High Test: Each fund is guided by a robust Investment Committee consisting of seasoned credit professionals. Every fund has a unique IC, and each member holds veto power. This means that each investment is evaluated not just by the fund manager and risk team, but also through multiple experienced lenses, ensuring scrutiny, and direction on collateral and covenants. Q) What is the kind of impact you see on bonds amid falling interest rate scenario especially for corporate bond issuance? A) The current interest rate cycle has implications for the corporate bond market. Falling interest rates typically benefit the bond market, leading to appreciation in existing bond prices and making new issuances more attractive for India's debt-to-GDP ratio at a two-decade low, we anticipate greater bond issuance activity as corporates look to refinance high-cost debt or fund new expansion already seen a surge in corporate bond issuances, driven by the RBI's easing interest rates and the need for cheaper financing said, liquidity particularly in the secondary market for retail investors remains a space still under development. Q) What is your take on the corporate bond market in India and how has it evolved over the past few years? A) Globally, credit markets are often larger than equity markets. While India is not there yet, its bond market is witnessing a decisive shift. Two major trends stand out:Record Growth in Issuances: FY25 has seen companies raise a record ₹9.9 lakh crore in corporate bonds, a 28% increase over the previous not only signals stronger market confidence but also increased corporate capex total bond market in India now stands at ₹226 lakh crore, with corporate bonds contributing over ₹53.6 lakh from Bank Lending to Bonds: More Indian companies are now turning to bond markets instead of traditional bank offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
28-07-2025
- Business
- Time of India
Rs 1 crore in 2017 would have grown meaningfully today: Northern Arc CEO on consistent credit AIF returns
In a financial landscape often dominated by volatile equities and underwhelming traditional debt products, credit-oriented Alternative Investment Funds ( AIFs ) have quietly carved a niche of stability and performance. In this edition of ETMarkets AIF Talk, Bhavdeep Bhatt, CEO of Northern Arc Investments , shares why credit AIFs — when backed by strong underwriting, sectoral expertise, and data-driven risk frameworks — have delivered consistent double-digit returns over the years. Bhatt points out that an investment of ₹1 crore in Northern Arc's flagship fund back in 2017 would have grown significantly today, with no instances of default or capital erosion. As India's bond market deepens and fixed income finds renewed favour in a softening rate environment, Bhatt makes a strong case for investors to explore this lesser-known but resilient asset class. Edited Excerpts – Q) Take us through the performance of the funds for the month of June. On a yearly basis, the fund has clocked over 12% return, PMS Bazaar data showed. It has been a steady performer since inception. Tell us how much wealth one would have maintained if he/she invested Rs 1 cr. at the launch of the fund back in 2017? Explore courses from Top Institutes in Please select course: Select a Course Category Project Management Design Thinking Product Management Digital Marketing Management healthcare Cybersecurity Public Policy Data Analytics Data Science PGDM Others MCA Finance others Technology Leadership Degree MBA Data Science CXO Operations Management Skills you'll gain: Project Planning & Governance Agile Software Development Practices Project Management Tools & Software Techniques Scrum Framework Duration: 12 Weeks Indian School of Business Certificate Programme in IT Project Management Starts on Jun 20, 2024 Get Details Skills you'll gain: Portfolio Management Project Planning & Risk Analysis Strategic Project/Portfolio Selection Adaptive & Agile Project Management Duration: 6 Months IIT Delhi Certificate Programme in Project Management Starts on May 30, 2024 Get Details A) At Northern Arc Investments, we have been in the business of credit AIFs and PMS for over a decade. Our track record reflects consistent and disciplined fund performance. Over the years, we've successfully exited six AIFs, delivering a gross XIRR of 14.57% on the matured funds. What's notable is that across these funds, there has not been a single rupee loss or even a single day's delay in payout or fund maturity. Moreover, every matured fund has seen the weighted average exit rating of the portfolio improve by at least one notch compared to the entry-level rating, an indication of both portfolio quality and prudent risk management. This disciplined approach has translated into strong and steady returns. As seen in recent PMS Bazaar data, our fund has clocked over 12% annual return, continuing its consistent performance since inception. An investor who had committed ₹1 crore at the launch of the fund back in 2017 would have witnessed meaningful wealth creation over this journey. Q) What is the investment objective? A) Our focused objective has always been Financial Inclusion and Risk-Adjusted Returns. Our investment approach aligns both with market opportunity and developmental impact. Each of our funds is crafted with a focused yet diversified mandate. For example, Fund 4 is designed to invest in a broad pool of securities from sectors such as microfinance, affordable housing finance, small business loans, commercial vehicle finance, and agri-business finance. The broader objective is not just return generation but also to promote financial inclusion in India. On the other hand, Fund 8 is tailored to invest in institutions that provide credit to microfinance institutions, small business finance companies, vehicle finance companies, corporates, and agri-business lenders—with the clear goal of earning higher risk-adjusted returns. Q) How do you manage risk in the fund? A) Risk management lies at the heart of everything we do. Our framework is built around what we call the High Touch, High Tech, and High Test model. High Touch: Within the Northern Arc ecosystem, a 35-member risk team evaluates financial, business, and governance risks. This includes regular site visits at the time of onboarding and throughout the investment tenure. Our underwriting guidelines are sector-specific, and we place significant emphasis on a company's ability to service debt from operating cash flows. We consciously avoid bullet repayment structures and holding company frameworks. High Tech: At the core of our tech-led risk framework is a comprehensive data lake capturing high-frequency data from our portfolio companies. Our proprietary analytics tools built on this this data infrastructure helps us identify patterns, interpret and forecast sectoral and geographic trends in credit origination and credit performance effectively. High Test: Each fund is guided by a robust Investment Committee consisting of seasoned credit professionals. Every fund has a unique IC, and each member holds veto power. This means that each investment is evaluated not just by the fund manager and risk team, but also through multiple experienced lenses, ensuring scrutiny, and direction on collateral and covenants. Q) What is the kind of impact you see on bonds amid falling interest rate scenario especially for corporate bond issuance? A) The current interest rate cycle has implications for the corporate bond market. Falling interest rates typically benefit the bond market, leading to appreciation in existing bond prices and making new issuances more attractive for companies. With India's debt-to-GDP ratio at a two-decade low, we anticipate greater bond issuance activity as corporates look to refinance high-cost debt or fund new expansion plans. We've already seen a surge in corporate bond issuances, driven by the RBI's easing interest rates and the need for cheaper financing options. That said, liquidity particularly in the secondary market for retail investors remains a space still under development. Q) What is your take on the corporate bond market in India and how has it evolved over the past few years? A) Globally, credit markets are often larger than equity markets. While India is not there yet, its bond market is witnessing a decisive shift. Two major trends stand out: Record Growth in Issuances: FY25 has seen companies raise a record ₹9.9 lakh crore in corporate bonds, a 28% increase over the previous year. This not only signals stronger market confidence but also increased corporate capex activity. The total bond market in India now stands at ₹226 lakh crore, with corporate bonds contributing over ₹53.6 lakh crore. Shift from Bank Lending to Bonds: More Indian companies are now turning to bond markets instead of traditional bank credit. Bonds offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution.
Mint
23-07-2025
- Business
- Mint
Retail investors chased 13% yields—TruCap gave them a default
On 18 July, CareEdge Ratings downgraded ₹150 crore worth of TruCap Finance bonds to 'D', or default, along with ₹750 crore of long-term bank facilities. The ratings agency cited the company's failure to pay interest and principal on its non-convertible debentures (NCDs) due on 16 July. The development has left a trail of retail investors in distress, as these bonds were widely distributed via online bond platform providers (OBPPs) such as Golden Pi, Grip Invest, Alitifi (by Northern Arc), and BondsIndia. These NCDs were first issued in January 2024 via Northern Arc, with subsequent tranches distributed through other platforms. Originally rated BBB and offering coupon rates of 13-13.5%, the bonds were sold in ticket sizes as low as ₹1 lakh. TruCap, a listed non-banking financial company focused on gold and loans for micro, small and medium enterprises (MSMEs), saw its stock plunge 61.4% over the past year (as of 18 July). The company was in the process of being acquired by the Marwadi Chandrana Group, but delays in committed fund transfers played a role in precipitating the default. A person familiar with the matter estimated that around 1,100 investors were impacted, adding that the total outstanding principal owed to retail investors stands at around ₹55 crore. A spokesperson for TruCap said the company is committed to repaying all dues in full. The company has ₹370 crore of net debt outstanding, of which ₹270 crore is not NCDs. As for the default of ₹72 crore of NCDs, the company repaid 15% between 18 and 21 July, the spokesperson said. TruCap has been at the centre of acquisition talks in recent months. InCred Finance was set to purchase its gold loan portfolio via a slump sale in February, but the transaction did not materialize as the Marwadi Chandrana Group wanted to acquire the entire company along with the gold portfolio. 'As on May 31, 2025, TruCap Finance Ltd's liquidity profile remained stretched given the debt repayments of ₹103 crore over the next three months against unencumbered cash and cash equivalents of ₹57 crore," CareEdge Ratings said in a note accompanying its downgrade. 'However, CareEdge Ratings had drawn comfort from the expected collection of ₹92 crore during the same period, fund infusion of ₹10 crore from the existing promoters and of ₹100 crore from the Marwadi Chandarana Group (MCG), of which the first tranche of ₹50 crore was expected by June 15, 2025, and the remaining ₹50 crore scheduled in July 2025," it added. The delay in debt servicing was due to non-receipt of committed funds and premature redemption of NCDs, which resulted in a liquidity squeeze for TruCap, CareEdge said, adding that its rating action was based on its policy on default recognition. Bonds break trust Some online bond platform providers had already flagged concerns. 'We had disabled trading in TruCap on Bondbazaar due to its small size and lack of operational information," said Suresh Darak, chief executive of Bondbazaar. Wint Wealth and IndiaBonds also did not list the TruCap bonds. CareEdge Ratings had issued warnings even before it downgraded TruCap bonds to D. 'The company's gearing levels also deteriorated due to erosion in net worth as on March 31, 2025. The ratings continue to reflect constraints arising from TruCap Finance Ltd's (TFL) moderate resource profile and persistent asset quality challenges, particularly within its unsecured business loan segment," CareEdge said in a note dated 4 June. 'Moreover, the company reported covenant breaches with certain lenders during FY25, although waivers were obtained in some instances." TruCap Finance swung to a net loss of ₹66.60 crore in FY25 from a net profit of ₹11.71 crore in FY24. This was primarily because the company's credit cost rose significantly to ₹72.80 crore in FY25 from ₹4.11 crore in the previous year, CareEdge said in its June report. 'As on March 31, 2025, TFL reported GNPA (gross non-performing asset) and NNPA of 3.70% and 2.20% on AUM (assets under management) respectively, compared to levels of 1.32% and 0.83% reported, as on March 31, 2024 primarily attributed to decline in AUM, driven by portfolio run-off and limited disbursement during FY25," the rating agency said. 'Further the company is also experiencing increased stress among the unsecured business loan segment, in line with the industry," CareEdge added. Ajai James, a software consultant based in Cochin, Kerala, invested ₹3 lakh in TruCap bonds through one of the online bond platforms on 15 May 2024 as he sought to diversify from equities. But on 16 July 2025, instead of receiving his principal and interest, he received an email from the bond platform announcing the default. 'The company and its promoters are currently evaluating all viable options to address this situation and have assured stakeholders that they are committed to an early resolution," the online platform said in its email to TruCap bond investors. 'I heard bonds are safer than stocks. I figured that might not actually be correct," said James over a phone call to Mint. Default or delay? CareEdge had first rated TruCap's bond and long-term bank facilities BBB (positive) in January 2024 but downgraded it one notch to BBB- in February 2025. Another downgrade in June 2025 brought the rating to BB+, two notches below investment grade, giving investors the right to demand early redemption. Catalyst Trusteeship Ltd, the bond trustee, said in an email to investors that TruCap had requested debenture holders to waive this right, but failed to obtain the majority approval in time. The issuer then committed to making full repayment on 16 July 2025. That deadline passed without payment, and the expected funding from the Marwadi Group did not come through. The Marwadi Group's open offer for TruCap shares remains live. Following the default, Catalyst indicated that TruCap had begun making partial repayments—5% of outstanding dues were cleared on 18 July and another 10% on 21 July. 'I would not call this a default. I would rather call it a payment delay," said an executive at one of the online platforms that sold TruCap bonds, speaking on condition of anonymity. 'The original due date was on a later date. The recent delay was due to mandatory early closure of the NCDs due to a covenant breach." The first signs of trouble had emerged as far back as October, when TruCap started breaching covenants linked to its bond agreements. But despite mounting financial pressures and rating downgrades, TruCap managed to meet its obligations until the missed payment on 16 July this year. A meeting of debenture holders has been scheduled for 8 August to decide the next course of action. Catalyst did not respond to queries fromMint. There is no clarity yet on what steps is Catalyst planning. Regulators have so far remained silent. AMint query to the Securities and Exchange Board of India went unanswered. Risk meets retail The incident has reignited debate around the role of online bond platforms and the suitability of direct bond investments for retail investors. 'Retail investors should consider the potential risks associated with bonds and not focus solely on the coupon rates offered by bond issuers," said Abhishek Kumar, a Sebi-registered investment adviser and founder of Sahaj Money. 'Usually, bond issuers who offer higher coupon rates do it to compensate for the higher risk of default associated with those bonds." 'OBPP acts as a matchmaker between retail investors and bond issuers. However, they are compensated through fees collected from bond issuers to promote the bonds, so the entire risk is borne by the investors and not by OBPP. Retail investors should consider all this before investing directly in these bonds," Kumar added. Nikhil Aggarwal, founder of Grip Invest, pointed out that all investments carry risk. 'Developments at TruCap seem to be the result of a delay in receiving equity financing combined with an earlier-than-expected redemption of the bonds. Since the underlying loan portfolio of nearly ₹1,000 crore continues to repay interest and principal, the next 8-10 weeks will showcase the final impact to investors," Aggarwal said. Vishal Dhawan, another Sebi-registered investment adviser and founder of Plan Ahead Wealth Advisors, said most investors may be better off investing in debt mutual funds unless they have the ability to dedicate time to their bond portfolio. 'Retail investors can consider investing in bonds provided they have the ability to keep track of the changes in financials of the companies issuing the bonds, and the constant shifts in ratings that may accompany them as well. Chasing the highest yields may not be a good strategy as the sustainability of returns along with principal payback are critical determinants." said Dhawan.
Business Standard
23-06-2025
- Business
- Business Standard
Northern Arc Capital rallies after Madhusudan Kela's fund picks stake
Shares of Northern Arc Capital rose 11% to Rs 230.40 after ace investor Madhusudan Kela's fund Cohesion MK Best Ideas Sub-Trust acquired shares of the firm via block deals on 20 June 2025. On 20 June 2025, Kela's fund, Cohesion MK Best Ideas Sub-Trust, acquired 10 lakh shares (0.62% equity) of Northern Arc at Rs 208.83 each, according to bulk deal data disclosed by the exchanges. Meanwhile, BNP Paribas Financial Markets acquired 8,67,328 shares, or a 0.54% stake, in the company at Rs 202.46 per share. In a separate transaction, asset manager 360 ONE exited a 12.02% stake in Northern Arc Capital through open market deals on June 20. The firm, via three affiliated funds -- Series 4, Series 5, and Series 7 -- sold 1.94 crore shares at prices between Rs 195.71 and Rs 198.74, amounting to a total deal value of over Rs 382 crore. Northern Arc is a diversified NBFC. It offers a suite of solutions including lending, placements, and fund investments in key sectors like MSME financing, MFI, consumer financing, vehicle financing, affordable housing financing, and agricultural supply chain finance. Northern Arc handles an AUM of Rs 16,792 crore through its balance sheet and active AIF funds as of 31 March 2025. On a consolidated basis, net profit of Northern ARC Capital declined 57.48% to Rs 37.76 crore while total income rose 7.42% to Rs 606.72 crore in Q4 March 2025 over Q4 March 2024.
