The Northern Arc Capital IPO has gained significant traction among market analysts and investors, primarily due to its position in the highly profitable non-banking financial sector. The company’s strategic move into the public market has drawn widespread attention, with analysts highlighting its growth potential and the lucrative opportunities it offers.
On Friday, September 15, Northern Arc Capital successfully raised Rs 229 crore from prominent anchor investors, bolstering its IPO launch. Notable anchor investors include SBI General Insurance, SBI Life Insurance, Reliance General Insurance, Kotak Mahindra Life Insurance, Goldman Sachs (Singapore), Societe Generale, and Quant Mutual Fund.
The IPO opened for public subscription on September 16 and closed on September 19, with the price range set between Rs 249 and Rs 263 per share. This price range, combined with the company’s market position, drew substantial interest from both institutional and retail investors.
Key IPO Details: Subscription and Allotment
Northern Arc Capital structured its IPO with 50% of shares allocated to Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and at least 35% reserved for retail investors. An additional allocation of 590,874 shares was set aside for eligible employees, who were offered a discounted price of Rs 24 per share.
Investors could bid in lots of 57 shares, with multiples of 57 shares available after the initial bid. This approach provided flexibility for various types of investors, making the IPO accessible to a broader audience.
Northern Arc Capital IPO: Strong Subscription Numbers
As of the final day of subscription, BSE data shows that the Northern Arc Capital IPO was oversubscribed by 110.91 times. The retail investor segment alone saw a remarkable 31.08 times subscription, while non-institutional investors (NIIs) subscribed 142.41 times, and the QIB segment was subscribed 240.79 times. The employee section, while smaller in volume, was still subscribed 7.33 times, reflecting strong interest from all investor categories.
In total, the IPO garnered bids for more than 238 million shares compared to the 2.14 million shares available. The subscription rate surged across the offering period, starting with 2.87 times subscription on the first day, increasing to 9.99 times on the second day, and reaching 20.18 times by the third day.
Grey Market Premium (GMP): Indicating a Strong Listing
The grey market premium (GMP) for the Northern Arc Capital IPO has been a topic of discussion among market participants, providing insights into the stock’s potential performance post-listing. As of September 21, the GMP was reported at +128, which indicates that shares were trading at a premium of Rs 128. Based on the upper end of the IPO price band (Rs 263), this implies a potential listing price of approximately Rs 391, a notable 48.67% increase over the IPO price.
The GMP has fluctuated over the course of 11 trading sessions, ranging from Rs 0 to Rs 202, signaling growing confidence in the IPO’s post-listing performance. Market analysts believe this upward trend is a strong indicator of a successful debut on the stock exchanges.
Business Overview of Northern Arc Capital
Northern Arc Capital is a leading non-banking financial company (NBFC), focused on providing credit to under-served segments of the economy. The company operates a well-diversified business model, offering lending solutions to micro, small, and medium enterprises (MSMEs), individuals, and financial institutions that cater to these sectors. Its robust network and data-driven approach enable it to serve clients with varying credit needs while maintaining a sound risk management framework.
The company has established itself as a reliable player in the NBFC sector, particularly known for its ability to bridge the gap between formal financial institutions and under-banked populations. This unique positioning has allowed Northern Arc Capital to thrive in an otherwise competitive industry.
Use of IPO Proceeds
The proceeds from the Northern Arc Capital IPO are expected to be utilized to strengthen the company’s balance sheet, with a primary focus on expanding its lending portfolio. The company aims to deploy capital to scale its lending operations across key segments, including retail lending, financial institution lending, and corporate lending.
Additionally, Northern Arc Capital plans to invest in technology enhancements and digital platforms to streamline operations and improve customer service. By doing so, the company is expected to enhance its operational efficiency and remain competitive in the fast-evolving NBFC landscape.
Investor Sentiment and Market Outlook
Investor sentiment surrounding the Northern Arc Capital IPO has been overwhelmingly positive, with experts noting the company’s strong fundamentals and growth potential. The rising subscription figures, coupled with the upward trend in the grey market, reflect the market’s confidence in the company’s future performance.
Northern Arc Capital’s ability to generate sustainable profits from underserved markets places it in a favorable position, especially in the context of India’s expanding financial inclusion agenda. With increasing demand for formal credit services among MSMEs and individuals, the company’s growth prospects are well-aligned with broader economic trends.
Moreover, Northern Arc Capital’s anchor investor lineup—including major players like SBI General Insurance and Goldman Sachs (Singapore)—adds credibility to the IPO and reinforces the confidence of retail and institutional investors alike.
Post-IPO Expectations
Following the IPO, Northern Arc Capital is expected to remain a key player in the NBFC sector, with strong growth potential driven by its innovative business model and expanding market reach. The funds raised will likely fuel further expansion, allowing the company to strengthen its position in the highly competitive financial services market.
The company’s stock is anticipated to perform well post-listing, with the grey market premium indicating a robust initial trading session. Analysts predict that Northern Arc Capital’s shares could see significant appreciation in value, making it an attractive investment for both short-term gains and long-term growth.
Read More: OSTP Media | Tech, Auto, and Trending News