Northern Arc Investments IFSC Trust
Status: Proposed investmentWhy disclosure?
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In case of questions
We welcome feedback on this proposed investment opportunity for FMO. The ending of the proposed investment phase is indicated on the right side of this page. In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
Northern Arc Investments IFSC Trust represents a USD 125 million climate-focused debt fund ("the Fund") aimed at providing growth-stage financing to sustainability-focused mid-sized corporates and financing entities in India. These borrowers focus on advancing climate mitigation and adaptation through innovative technologies or solutions. The Fund prioritizes sectors such as renewable energy, energy efficiency, e-mobility, sustainable agriculture, the circular economy, and water management. It is managed by Northern Arc Investment Managers Pvt. Ltd., a wholly-owned subsidiary of Northern Arc Capital Ltd., a Non-Banking Finance Company established in 2008 that facilitates access to debt for under-banked individuals and businesses in India.
What is our funding objective?
FMO intends to invest USD 25 million into the Fund to support companies utilizing technologies in solar energy, water conservation, and circular economy practices to enhance climate resilience. The Fund will also provide financing to companies funding climate-related projects, such as solar rooftop installations, electric mobility, and energy efficiency solutions.
Why do we want to fund this investment?
The Fund addresses financing gaps for climate-focused SMEs in India, supporting net-zero goals by providing tailored funding solutions for businesses in transportation, energy, and circular economy sectors. It helps these enterprises, most of which are SMEs, secure additional debt capital during growth cycles. These objectives align closely with FMO’s strategy. FMO’s Green label is expected to apply 100% and also the Reducing Inequalities label is being considered.
What is the Environmental and Social categorization rationale?
This concerns a preliminary E&S B+ categorized investment, entailing a Fund portfolio of small and medium enterprises and mid-cap corporate entities addressing climate mitigation/adaptation through e.g. small-scale solar systems, recycling, e-mobility and agri-tech, which have potential, (albeit limited), adverse environmental or social impacts that may extend site boundaries and might in part be irreversible. These risks can be prevented and addressed through relevant mitigation measures and most projects can be categorized as E&S categories B and C, while category A projects are excluded from the Fund’s investment. Further due diligence will determine whether the categorization will be lowered to an E&S category B. The E&S context of the Fund’s projects include risks related to supply chain management, labor and working conditions, (e)-waste management, as well as health and safety issues (mainly during construction). To manage and mitigate these risks, the Fund manager will need to update their environmental and social management system (ESMS), as well as their human resources policies and procedures, and labor and working conditions risks mitigation strategies; in accordance with IFC Performance Standards (PS) 1 and 2. PS 1-4 are applicable to the portfolio projects covering assessment and management of environmental and social risks and impacts (PS1), labor and working conditions (PS2), resource efficiency and pollution prevention (PS3) as well as limited impact on community health, safety and security (mainly related to e-mobility – PS4). Note that all investments will be managed in accordance with the IFC Performance Standards, and an Environmental & Social Action Plan will be part of the agreement.
More investments
| Date | Total FMO financing |
|---|---|
| 1/13/2025 | USD 15.00 MLN |
| 1/13/2025 | USD 5.00 MLN |
- Website customer/investment
- https://www.northernarcinvestments.com/
- Region
- Asia
- Country
- India
- Sector
- Infrastructure, Manufacturing and Services
- Publication date
- 1/13/2025
- Deadline for feedback
- 3/14/2025
- Total FMO financing
- USD 5.00 MLN
- Funding
- LUF
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B+