Northern Arc Investment Managers Private Limited has announced the first close of its Northern Arc Diversified Debt Fund, securing commitments of over ₹400 crore from institutional investors, family offices, ultra-high-net-worth individuals (UHNIs) and high-net-worth individuals (HNIs). The fund targets a corpus of ₹1,500 crore, with an additional greenshoe option of ₹500 crore, taking its potential size to ₹2,000 crore.
The fund marks the company’s 15th private credit fund and is structured as a sector-agnostic Category II Alternative Investment Fund (AIF), focusing on performing private credit opportunities.
Northern Arc Diversified Debt Fund Targets 16% XIRR
Rated AA (SO) by CareEdge Ratings, the fund has a tenure of five years and targets an XIRR of 16%. Its first close reflects participation from investors across institutional and wealth segments as Northern Arc continues to expand its private credit platform.
The announcement also coincides with the maturity of the Northern Arc India Impact Fund, which channelled global capital into financial inclusion opportunities across India. During its tenure, the fund supported 60 businesses across credit cycles and recorded gross deployments of over ₹1,398 crore at the fund level.
Ashish Mehrotra, Managing Director and Chief Executive Officer, Northern Arc Capital
Commenting on the developments, Ashish Mehrotra said, “The first close of the Northern Arc Diversified Debt Fund reflects continued investor interest in private credit and its evolving role in sophisticated investment portfolios. The maturity of our Northern Arc India Impact Fund further demonstrates our experience in managing private credit investments across credit cycles.”
He further highlighted that Northern Arc has deployed over ₹16,500 crore across 15 AIFs and two Portfolio Management Services (PMS) offerings over the past decade, serving more than 1,500 investors across institutional and wealth segments.
Seven Funds Matured With Weighted Average XIRR of Over 14.5%
Since its inception in 2014, Northern Arc Investment Manager has launched 15 funds, of which seven have fully matured, delivering a weighted average gross XIRR of over 14.5%.
According to the company, these funds delivered returns in line with their targeted performance, without any extension in tenure or principal loss to investors. The investment manager has also cumulatively distributed over ₹10,000 crore in principal and coupon payments since inception.
Northern Arc Capital Reports 41% Growth in Q2 FY27 PAT
Alongside its investment management developments, Northern Arc Capital reported a 41% year-on-year increase in consolidated profit after tax (PAT) to ₹129 crore in Q2 FY27. Its net interest income (NII) also grew 32% year-on-year to ₹425 crore.
The company’s lending assets under management (AUM) increased 34% year-on-year to ₹19,003 crore. Direct lending AUM recorded a 64% growth to ₹12,502 crore, accounting for 66% of the overall portfolio. Credit costs also improved by 11 basis points year-on-year to 2.66%.
The fund’s first close and the maturity of the Northern Arc India Impact Fund mark two significant developments in the company’s private credit business. Alongside its lending performance, these milestones highlight Northern Arc’s continued focus on expanding its investment management platform, maintaining portfolio quality and connecting capital with businesses across sectors.
Disclaimer: All figures are as of September 30, 2026. Past performance is not indicative of future results. Target returns are not assured, and investments in AIFs are subject to market, credit, liquidity and other risks, including loss of capital.
–By: Aakriti Jaiswal
