AZB & Partners advised the US International Development Finance Corporation (DFC) when it agreed a loan of (₹3.7 billion) US$50 million to Northern Arc Capital as an external commercial borrowing.
Verist Law advised Northern Arc Capital, working with in-house lawyers Shakeel Ahamed and Varun Sajja. While a security trustee agreement was signed on 2 December, the deal is yet to close.
AZB & Partners’ team comprised partners Gautam Saha and Pallavi Meena, and senior associate Pragya Sood. Verist Law’s team comprised managing partner Srishti Ojha and partner Sudha Muddaiah.
AZB & Partners told India Business Law Journal that the transaction “explored territory that is usually uncharted for financings of such nature, whereby security was created in favour of the DFC in the form of a vanilla charge on receivables of identified loan portfolios of Northern Arc, as well as an equitable assignment of rights and interest of Northern Arc in the underlying loan agreements in favour of DFC. The incremental security cover was introduced … to strengthen DFC’s rights as a lender, and enable it to exercise step-in rights in respect of the underlying loan agreements in a default scenario.”
The loan is expected to help Northern Arc, a Chennai-based non-banking financial company formerly known as IFMR Capital Finance, extend loans to businesses that expand access to water, sanitation and food, or advance women’s economic empowerment.