Northern Arc Diversified Debt Fund First Close
Northern Arc Investment Managers Private Limited, the asset‑management arm of Northern Arc Capital Limited, announced the first close of its Northern Arc Diversified Debt Fund with commitments exceeding Rs 400 crore from institutions, ultra‑high‑net‑worth individuals and high‑net‑worth individuals. The fund is the manager’s 15th private‑credit vehicle, structured as a sector‑agnostic Category II Alternative Investment Fund (AIF) and rated AA (SO) by CareEdge Ratings.
The fund targets a corpus of Rs 1,500 crore, with an additional greenshoe option of Rs 500 crore, potentially expanding the total size to Rs 2,000 crore. It has a five‑year tenure and aims to deliver a 16% XIRR to investors.
The announcement coincides with the maturity of the Northern Arc India Impact Fund, which achieved a 14.59% gross XIRR and, over its life, supported 60 businesses with a gross deployment of over Rs 1,398 crore at the fund level.
Ashish Mehrotra, Managing Director and Chief Executive Officer of Northern Arc Capital, said the first close reflects continued investor interest in private credit and underscores the firm’s decade‑long experience in managing credit across cycles. He highlighted that the platform has deployed over Rs 16,500 crore across 15 AIFs and two PMS offerings, serving more than 1,500 investors.
Since its inception in 2014, Northern Arc Investment Managers has launched 15 funds; seven have fully matured, delivering a weighted‑average XIRR of over 14.5% without extensions or principal loss. Cumulatively, the manager has distributed over Rs 10,000 crore of principal and coupon to investors.
Q2FY27 Financial Performance
In the second quarter of FY 27, Northern Arc Capital reported a consolidated PAT of Rs 129 crore, a 41% year‑on‑year increase, and net interest income (NII) of Rs 425 crore, up 32% YoY. Lending assets under management grew 34% YoY to Rs 19,003 crore, driven by a 64% YoY rise in direct‑lending AUM to Rs 12,502 crore, which now accounts for 66% of the overall portfolio. Credit costs improved 11 basis points YoY to 2.66%, indicating resilience in the lending franchise.
Disclaimer: All figures are as of 30 September 2026. Past performance is not indicative of future results. Target returns are not assured, and investment in AIFs involves market, credit, liquidity and other risks, including loss of capital. This release is for information only and is not an offer or solicitation; units are offered only by private placement through the private placement memorandum, which investors should read. The CareEdge rating is not a recommendation and does not eliminate credit risk.