Northern Arc operates a diverse financial services platform designed primarily to meet the diverse retail credit needs of India’s underserved families and enterprises.
Northern Arc Capital Ltd shares will be launched on the bourses on September 24, after the non-banking financial institution received a 110.71 times subscription on its initial share offering. Earlier, anchor investors contributed Rs 229 crore to the maiden share offering.
The Chennai-based company’s IPO raised Rs 777 crore and had a price range of Rs 249-263 per share. The company, which specializes in retail lending, is expected to have a successful stock market listing, with the current grey market premium (GMP) implying a listing gain of Rs 144, or 54.75 percent.
Shivani Nyati, Head of Wealth at Swastika Investmart Ltd., said the company’s solid fundamentals, together with the huge investor reaction, point to a good debut.
The company’s emphasis on servicing underprivileged people and companies sets it apart in the competitive Indian retail lending sector. While Northern Arc Capital has increased revenue and profit, concerns such as negative cash flow and a high debt-to-equity ratio must be addressed, she added.
The IPO consisted of a fresh issue of equity shares worth Rs 500 crore and an offer for sale (OFS) of up to 1,05,32,320 equity shares worth Rs 277 crore by investor shareholders at the upper end of the price range. This brings the total issue size to Rs 777 crore.
The proceeds from the new issuance will be utilized to cover the company’s future capital requirements for onward lending.
According to Prathamesh P Masdekar, Research Analyst at StoxBox, the stock is expected to make a good launch on the public exchanges on September 24, potentially demanding a premium of up to 57% above the upper band price.
“Considering healthy subscription demand and upbeat market sentiments, it is indicating a healthy listing gain in the range of 40-50% or even above against the issue price of Rs 263 per share,” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities Ltd.
The company’s extensive financial services platform was established primarily to meet the diverse retail credit needs of India’s underserved households and enterprises.
The company’s lender base is diverse, consisting of banks, offshore financial institutions, and non-bank financial companies (NBFCs). Furthermore, investors offer a solid base for additional funding.