Key Takeaways
- • Northern Arc Investment Managers has secured over ₹400 crore in first-close commitments for its Northern Arc Diversified Debt Fund from institutional investors, family offices, UHNIs and HNIs, against a target corpus of ₹1,500 crore plus a ₹500 crore greenshoe.
- • The fund is the company's 15th private credit vehicle, structured as a sector-agnostic Category II AIF focused on performing private credit, rated AA (SO) by CareEdge Ratings, with a five-year tenure and a targeted XIRR of 16%.
- • Northern Arc says seven of its 15 funds have fully matured with a weighted average gross XIRR of over 14.5%, without tenure extensions or principal loss, and over ₹10,000 crore distributed since 2014 inception.
- • The Northern Arc India Impact Fund matured during the period, having supported 60 businesses with gross deployments above ₹1,398 crore.
- • Northern Arc Capital reported Q2 FY27 consolidated PAT of ₹129 crore (up 41% YoY) and lending AUM of ₹19,003 crore (up 34% YoY), with credit costs at 2.66%.
Summary
Northern Arc Investment Managers Private Limited has announced the first close of its Northern Arc Diversified Debt Fund, with commitments exceeding ₹400 crore from institutional investors, family offices, ultra-high-net-worth individuals and high-net-worth individuals. The fund targets a corpus of ₹1,500 crore, with an additional greenshoe option of ₹500 crore, for a potential total size of ₹2,000 crore. It is structured as a sector-agnostic Category II Alternative Investment Fund focused on performing private credit opportunities, and marks the company's 15th private credit fund.
The fund is rated AA (SO) by CareEdge Ratings, has a tenure of five years and targets an XIRR of 16%. According to the company, the first close reflects participation across institutional and wealth segments as Northern Arc continues to expand its private credit platform. The announcement coincides with the maturity of the Northern Arc India Impact Fund, which channelled global capital into financial inclusion across India and supported 60 businesses through credit cycles, with gross deployments of over ₹1,398 crore at 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 its evolving role in sophisticated portfolios. He added that Northern Arc has deployed over ₹16,500 crore across 15 AIFs and two Portfolio Management Services offerings over the past decade, serving more than 1,500 investors. Per the company, seven of its 15 funds since 2014 inception have fully matured, delivering a weighted average gross XIRR of over 14.5%, in line with targeted performance and without tenure extensions or principal loss. Cumulative distributions in principal and coupon payments exceed ₹10,000 crore.
Alongside these developments, Northern Arc Capital reported a 41% year-on-year increase in consolidated profit after tax to ₹129 crore in Q2 FY27, with net interest income up 32% to ₹425 crore. Lending AUM rose 34% to ₹19,003 crore, while direct lending AUM grew 64% to ₹12,502 crore, accounting for 66% of the portfolio. Credit costs improved 11 basis points year-on-year to 2.66%. The company notes all figures are as of September 30, 2026, and that target returns are not assured and AIF investments carry market, credit, liquidity and capital loss risks.
The fund is rated AA (SO) by CareEdge Ratings, has a tenure of five years and targets an XIRR of 16%. According to the company, the first close reflects participation across institutional and wealth segments as Northern Arc continues to expand its private credit platform. The announcement coincides with the maturity of the Northern Arc India Impact Fund, which channelled global capital into financial inclusion across India and supported 60 businesses through credit cycles, with gross deployments of over ₹1,398 crore at 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 its evolving role in sophisticated portfolios. He added that Northern Arc has deployed over ₹16,500 crore across 15 AIFs and two Portfolio Management Services offerings over the past decade, serving more than 1,500 investors. Per the company, seven of its 15 funds since 2014 inception have fully matured, delivering a weighted average gross XIRR of over 14.5%, in line with targeted performance and without tenure extensions or principal loss. Cumulative distributions in principal and coupon payments exceed ₹10,000 crore.
Alongside these developments, Northern Arc Capital reported a 41% year-on-year increase in consolidated profit after tax to ₹129 crore in Q2 FY27, with net interest income up 32% to ₹425 crore. Lending AUM rose 34% to ₹19,003 crore, while direct lending AUM grew 64% to ₹12,502 crore, accounting for 66% of the portfolio. Credit costs improved 11 basis points year-on-year to 2.66%. The company notes all figures are as of September 30, 2026, and that target returns are not assured and AIF investments carry market, credit, liquidity and capital loss risks.
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