Northern Arc Capital IPO Day 4: Hot Pick in Mainboard! GMP Soars – Should You Apply Before It’s Too Late?
The Northern Arc Capital IPO has become the more popular option in the mainboard segment. Analysts believe that the company serves a very profitable market, even though accessing capital has historically been difficult for the lower end of the Indian market. Experts predict Northern Arc could grow its loan portfolio by 5-10 times over the next 4-7 years.
Despite being viewed as stronger than the Arkade Developers IPO, some experts were not impressed with Northern Arc’s anchor investor arrangements. On Friday, the company raised ₹229 crore from anchor investors before opening the IPO for the public. Key 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 on Monday, September 16, and will close today, Thursday, September 19. The price range is set between ₹249 and ₹263 per share, with a minimum bid of 57 shares and multiples thereof.
Subscription Details
The IPO has allocated 50% of shares to Qualified Institutional Buyers (QIBs), at least 15% to Non-Institutional Investors (NIIs), and 35% for retail investors. Additionally, 590,874 shares have been reserved for employees at a discounted price of ₹24 per share.
As of the third day, the IPO has been subscribed 20.18 times. The retail portion was subscribed 18.97 times, while non-institutional investors subscribed 50.80 times. QIBs’ portion was booked 31%, and employees’ portion was subscribed 4.32 times.
Company Background
Northern Arc Capital, established to support low-income households and small businesses in India, offers a range of financial services. Since 2009, it has focused on improving financial inclusion. By March 31, 2024, the company had enabled financing of over ₹1.73 trillion, impacting more than 101.82 million people in India.
Review and Expert Opinions
Brokerage firms like GEPL Capital and Canara Bank Securities have rated the IPO as “Subscribe” based on Northern Arc’s strong position in India’s growing retail credit market, especially in rural and semi-urban areas. The company has developed a network of 328 Originator Partners, 50 Retail Lending Partners, and 1,158 Investor Partners, which is supported by its advanced technology platform. Over the last three years, it has maintained solid asset quality and shown 20% growth in net interest income.
Analysts believe Northern Arc is well-positioned to take advantage of the 13-14% growth in India’s credit market by FY26.
IPO Details
The Northern Arc Capital IPO includes a fresh issue of shares worth ₹500 crore and an offer for sale (OFS) of 1.05 crore shares, valued at ₹277 crore. The total offering is worth ₹777 crore. The proceeds will be used to fund the company’s lending business and meet future capital needs.
The IPO’s lead managers are ICICI Securities, Axis Bank, and Citigroup Global Markets, with Kfin Technologies acting as the registrar.
Grey Market Premium (GMP) Update
As of today, Northern Arc Capital’s GMP is +₹160. This means the shares are trading at a ₹160 premium in the grey market, pushing the estimated listing price to ₹423 per share, which is 60.84% higher than the IPO price of ₹263.
The grey market premium reflects the strong demand for Northern Arc shares beyond the official price range.
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