UGRO Capital, a data-driven NBFC centered on lending to the MSME sector, has finalized a strategic all-cash acquisition of Profectus Capital for ₹1,400 crore. Funded through proceeds from a recent equity raise and internal accruals, the transaction is poised to significantly expand UGRO’s market footprint and lending portfolio, pending requisite regulatory and shareholder approvals.

Once completed, Profectus Capital will operate as a wholly owned subsidiary of UGRO. With an asset base of ₹3,468 crore as of March 2025, and an extensive footprint—28 branches spanning seven states—the acquisition is expected to augment UGRO’s Assets Under Management (AUM) by approximately 29%, bringing it close to ₹15,500 crore.

Leadership at UGRO highlights the strategic nature of this deal. Founder and Managing Director Shachindra Nath noted that the acquisition delivers immediate scale, estimated cost savings of ₹115 crore, and an anticipated ₹150 crore in incremental annual profit—boosting return on assets (RoA) by 0.6–0.7 percentage points. Further, Profectus’ expertise in school financing unlocks a new vertical with medium-term potential estimated at ₹2,000 crore, reinforcing UGRO’s position in secured lending.

Profectus’ focused lending areas—Loan Against Property (LAP), machinery finance, supply chain finance, and school financing—closely align with UGRO’s data-led underwriting model. The move strengthens UGRO’s secured asset mix and offers access to emerging markets and embedded finance opportunities. Market response has been upbeat. UGRO’s shares rebounded, registering a more than 7% intraday gain on the Bombay Stock Exchange following the announcement—reflecting investor confidence in the strategic and financial merits of the deal.

Profectus Capital, which has maintained stable asset quality with a Gross NPA of 1.6% and Net NPA of 1.1%, will integrate into UGRO’s distribution network. The acquisition is expected to enrich UGRO’s capabilities and reach, enhancing service delivery to its MSME clientele. The acquisition will be financed via UGRO’s ₹400 crore rights issue supplemented by internal funds. The company is also seeking approval for a preferential issuance of compulsorily convertible debentures as an additional funding contingency.

Completion of the transaction hinges on approvals from the Reserve Bank of India and shareholder nods. Advisors engaged in the deal include InCred Capital, SNG & Partners, PwC, and Legacy Growth Partners for UGRO, and Avendus Capital for Profectus.

This acquisition marks a major step in UGRO’s inorganic growth strategy and reinforces its commitment to closing the MSME credit gap through a scalable, tech-led approach. With an enhanced asset base, diversified product offerings, and improved operational efficiency, UGRO is well-positioned to emerge as one of India’s leading MSME-focused NBFCs.