Northern Arc Capital IPO: Key Details You Need to Know in 10 Points

Northern Arc Capital, a well-established non-banking financial company (NBFC), is set to launch its Initial Public Offering (IPO) on Monday, September 16, 2024. The Chennai-based NBFC has a long-standing reputation for providing credit to low-income and underserved communities, operating through an innovative business model that focuses on originator partnerships and direct access to capital. The IPO is expected to attract significant attention from investors, given the company's impressive financial growth and market positioning.

Here are the top 10 key details you need to know about the Northern Arc Capital IPO:

1. Key Dates for the Northern Arc Capital IPO

The IPO will be available for public subscription for three days, starting Monday, September 16, 2024, and will close on Thursday, September 19, 2024. Investors have this window to subscribe to the offering and participate in the IPO.

2. Price Band of Northern Arc Capital IPO

The price band for the IPO has been set at ₹265 per equity share, with a face value of ₹10 per share. This price band determines the price at which shares will be offered to the public during the subscription period.

3. IPO Details and Issue Size

The Northern Arc Capital IPO is a combination of a fresh issue and an offer for sale (OFS) component. The total issue size amounts to ₹777 crore, with 23,234,520 equity shares on offer. Of this, ₹2229 crore has already been mobilized from anchor investors ahead of the public subscription.

The fresh issue portion will help the company strengthen its capital base and fund future growth plans, while the OFS allows existing shareholders to divest part of their holdings.

4. Lot Size for Investors

Investors can subscribe to a minimum lot size of 57 shares. Any additional subscriptions must be in multiples of 57 shares. This lot size allows retail investors to enter the market with a relatively small investment, making it an accessible opportunity for a wide range of market participants.

5. Peers in the NBFC Sector

Northern Arc Capital operates in a competitive market with notable peers such as:

• Muthoot Finance Ltd. (P/E ratio of 36.64)
• Bajaj Finance Ltd. (P/E ratio of 15.12)
• Fusion Micro Finance Ltd. (P/E ratio of 17.81)
• MAS Financial Services Ltd. (P/E ratio of 18.55)

These companies serve as benchmarks in evaluating the potential performance and valuation of Northern Arc Capital’s IPO.

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6. IPO Reservation for Investor Categories

The IPO has reserved shares across different investor categories:

• 50% of the shares are reserved for Qualified Institutional Buyers (QIB).
• 15% of the shares are reserved for Non-Institutional Investors (NII).
• 35% of the shares are reserved for retail investors.

Additionally, a portion of the offer is reserved for employees, with 90,874 equity shares allocated under the employee reservation segment.

7. Financial Performance of Northern Arc Capital

Northern Arc Capital has demonstrated strong financial growth, with profits and revenues increasing by 45% between March 31, 2023, and March 31, 2024. This financial strength is a key selling point for the IPO, as investors seek companies with a proven track record of profitability and growth potential.

The company's business model, which focuses on underserved segments and spans a wide range of credit offerings, has contributed to its robust financial performance. This financial stability makes Northern Arc Capital a compelling investment opportunity in the NBFC space.

8. IPO Allotment and Listing Dates

The allotment of shares is expected to be finalized by Friday, September 20, 2024. Successful applicants will receive the allotted shares by Monday, September 23, 2024. The company is expected to list its shares on the stock exchanges on Tuesday, September 24, 2024.

These key dates are crucial for investors tracking the performance of their investments and planning future trading strategies.

9. Lead Managers for the IPO

The lead managers for the Northern Arc Capital IPO are:

• JM Financial Services Ltd.
• Axis Bank Ltd.
• Kotak Mahindra Capital Company Ltd.
• IIFL Securities Ltd.
• ICICI Securities Ltd.

These institutions are responsible for managing the entire IPO process, ensuring compliance with regulatory requirements, and coordinating with market participants.

10. GMP (Grey Market Premium) and Market Sentiment

As of today, the Grey Market Premium (GMP) for Northern Arc Capital's IPO is trading at a slight premium to its issue price, indicating that market participants are willing to pay more than the listed price for the shares. GMP serves as an indicator of the market sentiment ahead of the IPO listing and can provide valuable insights into expected demand.

GMP fluctuates based on various factors such as demand, overall market conditions, and investor perception. While it is not a guarantee of future performance, it is an important metric for investors considering an IPO investment.

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The Northern Arc Capital IPO presents an opportunity for investors to participate in the growth story of a leading NBFC with a strong focus on underserved communities. With a robust financial performance, a diverse business model, and a clear path for future expansion, Northern Arc Capital’s IPO is poised to attract significant interest from retail and institutional investors alike.

As the IPO opens for subscription, investors should keep an eye on the key dates, price band, and allotment details to make informed investment decisions. The competitive positioning of Northern Arc Capital in the NBFC sector, coupled with the strength of its financials, could make this a promising investment.