UGRO Capital has announced a landmark acquisition of Profectus Capital Pvt. Ltd in an all-cash deal valued at Rs. 1,400 crore. This transaction, structured as a 100% equity buyout, is funded through UGRO Capital’s recent equity raise and is subject to regulatory and shareholder approvals, including those from the Reserve Bank of India. Upon completion, Profectus Capital will become a wholly-owned subsidiary of UGRO Capital, marking a pivotal step in the company’s mission to bridge the MSME credit gap and expand its secured lending portfolio.
The strategic rationale behind this acquisition centers on UGRO Capital’s commitment to empowering the MSME ecosystem through technology-driven, secured financial solutions. By integrating Profectus Capital’s robust portfolio—comprising INR 3,468 crore in assets under management, a low NPA ratio, and a 28-branch network—UGRO Capital will instantly scale its AUM by 29%. This move not only accelerates UGRO’s growth trajectory but also enhances its offerings in high-potential segments such as school financing, machinery finance, supply chain finance, and secured loans against property.
Shachindra Nath, Founder and Managing Director of UGRO Capital, emphasised the transformative impact of the acquisition, highlighting anticipated cost savings of INR 115 crore and annualised incremental profitability of INR 150 crore. These synergies are expected to boost UGRO’s return on assets (ROA) by 0.6-0.7%, making the transaction capital adequacy accretive and positioning UGRO as a formidable player in the secured MSME lending market.
Profectus Capital’s established presence across seven states and its focus on secured lending products align seamlessly with UGRO Capital’s data-driven approach and expansion strategy. Both companies will maintain their current operations during the integration phase, ensuring continuity and minimal disruption for clients and employees. Industry analysts view this acquisition as one of the largest NBFC deals in recent years, reflecting ongoing consolidation in the sector and the growing demand for specialized MSME financing solutions in India.
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The acquisition is being made to unlock significant value for UGRO Capital, strengthening its market presence and deepening its reach into underserved MSME segments. As the deal awaits regulatory clearance, the financial sector will closely watch how the combined entity leverages its expanded scale, operational efficiencies, and enhanced product suite to drive sustainable growth in the MSME lending space
