Northern Arc Capital, a leading non-banking financial company (NBFC), is set to open its initial public offering (IPO) for subscription on Monday, September 16, 2024. As a systemically important NBFC, Northern Arc Capital plays a significant role in India's financial inclusion ecosystem. It serves low-income and underserved households, as well as businesses, by providing access to credit both directly and through its network of Originator Partners.
In this blog, we will dive into the key details of the Northern Arc Capital IPO, explore the company's business model, and understand why this IPO is gaining attention in the market.
The subscription window for the Northern Arc Capital IPO opens on Monday, September 16, 2024, and closes on Thursday, September 19, 2024. This three-day window gives investors an opportunity to participate in what could be one of the most promising offerings from the NBFC sector this year.
The company has been instrumental in addressing the credit needs of underserved communities in India, which has been the driving force behind its growth. With this IPO, Northern Arc Capital aims to further expand its reach and solidify its position in the financial services industry.
The IPO comes with a price band set at ₹249 to ₹263 per equity share, with each share having a face value of ₹10. The total size of the IPO aggregates to ₹777 crore, which includes two major components:
This structure allows the company to raise fresh capital while also providing an exit opportunity for some of its existing investors.
Investors looking to subscribe to the IPO need to be aware of the lot size. The minimum lot size is 57 equity shares, and subsequent bids can be made in multiples of 57 shares. At the floor price of ₹249, the minimum investment for a single lot would be ₹14,193, while at the cap price of ₹263, it would amount to ₹14,991.
Northern Arc Capital operates in a highly competitive space. Some of its key listed peers include:
These companies have established their presence in the market, and Northern Arc Capital aims to strengthen its position among these competitors with this IPO.
The IPO has a well-distributed reservation structure:
In addition, employees of Northern Arc Capital who participate in the employee reservation portion will receive a discount of ₹24 per equity share, and up to 590,874 equity shares have been allocated to this segment.
Northern Arc Capital has shown impressive financial performance over the years. Between March 31, 2023, and March 31, 2024, the company’s profit after tax (PAT) saw a 31% increase, while revenue grew by 45%. This strong performance reflects the company's ability to scale its operations while maintaining profitability.
The allotment of shares for the Northern Arc Capital IPO is expected to be finalized on Friday, September 20, 2024. Refunds for unsuccessful bids will be processed by Monday, September 23, and shares will be credited to the demat accounts of successful bidders on the same day. The shares will likely be listed on both the BSE and NSE on Tuesday, September 24, 2024.
The IPO is managed by top-tier financial institutions. ICICI Securities Ltd, Axis Bank Ltd, and Citigroup Global Markets India Private Ltd are the book-running lead managers for the issue. The registrar for the IPO is KFin Technologies Ltd, which will handle all the necessary allotment and refund procedures.
Ahead of the public offering, Northern Arc Capital has already raised ₹229 crore from anchor investors. The company allotted 87.02 lakh equity shares to 15 funds at ₹263 per share, which is the upper end of the price band. This early-stage fundraising highlights the confidence that institutional investors have in the company's potential.
As of the latest update, the Grey Market Premium (GMP) for Northern Arc Capital is Re 0. While this might suggest a neutral outlook from grey market investors, GMP trends can change closer to the listing date, depending on subscription levels and broader market sentiment.
The Northern Arc Capital IPO presents a unique opportunity for investors to be part of a company that has been a pioneer in providing financial inclusion to underserved communities in India. With its diversified business model, strong financial performance, and experienced management, Northern Arc Capital is well-positioned for growth.
Investors should carefully consider the price band, financials, and reservation structure before making a decision. As always, it's advisable to consult with financial advisors or conduct thorough research before subscribing to any IPO.
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