UGRO Capital to Acquire Profectus Capital through Rs.1,400 Crore Deal
In an all-cash deal worth Rs.1,400 crore, UGRO Capital, a data-tech MSME (micro, small, and medium enterprises) lending platform, plans to buy Profectus Capital Pvt. Ltd. from UK-based private equity firm Actis' businesses Actis PC (Mauritius) and Actis Investment (Mauritius).
To deploy money into a fully secured asset portfolio that provides immediate scale benefits with zero origination expenses, UGRO will use the proceeds from the most recent equity offering for the acquisition.
“To facilitate the discharge of purchase consideration for the proposed acquisition, the company is proposing to add financing of Profectus’ acquisition as an object of the existing preferential issuance of compulsorily convertible debentures by seeking fresh approval from the board and shareholders,” UGRO says adding the deal is also subject to the approval of the Reserve Bank of India (RBI) and shareholders.
It states that Profectus will become a wholly-owned subsidiary of UGRO Capital following the acquisition, which is expected to generate a yearly profit of about Rs.150 crore for UGRO, making it a capital adequacy accretive transaction. The businesses anticipate strong product and regional alignment in supply chain finance, machinery finance, and secured LAP (loans against property), all of which are thought to boost operational efficiency.
“This strategically priced acquisition deploys our equity raise to achieve instant scale and Rs.115 crore cost savings and annualized incremental profitability of Rs.150 crore, thus boosting ROA (return on assets) by 0.6–0.7 percent,” says Shachindra Nath, founder and managing director of UGRO Capital.
By March 2025, Profectus had Rs.3,468 crore in assets under management and was present in seven states with a network of 28 branches and more than 800 employees. The net non-performing assets (NPA) ratio of the business is 1.1 percent, and its gross NPA ratio is 1.6 percent.
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Following the acquisition, UGRO's AUM is anticipated to rise by 29 percent, which will aid in portfolio diversification and hasten the growth of its high-yield ‘emerging markets’ and ‘embedded finance’ business lines. The agreement will also add school finance, a new product to the firm's lineup, for which UGRO estimates a medium-term financing potential of Rs.2,000 crore, according to the company.
UGRO Capital has Rs.12,003 crore in assets as of March 2025, a 33 percent increase from the year before. At Rs.2.436 crore, net disbursements for the year increased by 57 percent. For the year, the lender reported a profit after taxes of Rs.40.5 crore. At the end of FY25, the company's net non-performing asset (NPA) ratio was 1.6 percent, while its gross NPA ratio was 2.3 percent.
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With connections to 17 banks and non-banking financial organizations (NBFCs), UGRO is a significant participant in the co-lending industry in India. Co-lending and co-originating partners account for a substantial 42 percent of the company's AUM that is off-balance sheet. In 2018, the NBFC raised Rs.900 crore in equity capital; in 2023, it raised Rs.340 crore; and in 2024, it raised Rs.1,265 crore. Over the following three years, the company wants to gain one percent of the market.