UGRO Capital to Acquire Profectus Capital in an All-Cash Deal Worth ₹1,400 Crore

UGRO Capital, a prominent player in MSME lending, is acquiring Profectus Capital for ₹1,400 crore in cash. This strategic move aims to strengthen its secured lending portfolio, expand its geographical presence and scale assets under management.

UGRO Capital Acquisition of Profectus Capital 

UGRO Capital Limited, a leading DataTech NBFC focused on MSME lending, today announced a significant development that underscores its commitment to empowering the MSME ecosystem through tailored, embedded financial solutions and expanding its Emerging Market business reach. 

UGRO Capital has executed a Share Purchase Agreement with the existing shareholders of Profectus Capital Private Limited ("Profectus") to acquire 100% of the shares of Profectus. This all-cash deal, with the consideration payable in a single tranche at closing, shall mobilise proceeds from UGRO's recently announced equity raise, will deploy capital into a fully secured asset portfolio delivering instant scale benefits with zero origination costs, making Profectus a wholly owned subsidiary.

Upon completion, Profectus will become a wholly-owned subsidiary of UGRO Capital. The deal remains subject to regulatory approvals from the Reserve Bank of India and shareholders.

Acquisition Strategically Enhances 4 Core NBFC Pillars

UGRO’s focus on technology-enabled secured MSME lending aligns well with Profectus Capital’s existing portfolio. The latter’s strong presence in secured products such as Loans Against Property (LAP), machinery loans and supply chain finance complements UGRO’s current offerings.

1. Immediate AUM Growth and Portfolio Diversification
   The acquisition results in an immediate 29% increase in Assets Under Management (AUM), significantly diversifying the combined portfolio. This sets the stage for accelerated growth in high-yield segments such as Emerging Markets and Embedded Finance.
2. Expansion into School Financing
   The deal introduces School Financing into the portfolio, unlocking a medium-term growth potential estimated at ₹2,000 crore, as per our internal assessment.
3. Strong Geographic and Product Alignment
   It foresees considerable synergy in Secured Loan Against Property (LAP), Machinery Finance, and Supply Chain Finance. This alignment is expected to drive operational efficiencies, with projected cost savings of ₹115 crore and an estimated profitability boost of ₹150 crore, enhancing Return on Assets (ROA) by 0.6–0.7% post-merger.
4. Strengthened Asset Mix for Scalable Growth
   The merged entity will benefit from a higher share of secured assets, further strengthening its position to scale operations in Emerging Markets and Embedded Finance.

Financial and Operational Impact

As of March 2025, UGRO Capital reported:

• ₹12,003 crore in assets under management, +33% YoY
• ₹2,436 crore net disbursements, a 57% increase YoY
• Gross NPA: 2.3%
• Net NPA: 1.6%
• Profit after tax: ₹40.5 crore

Profectus Capital’s financials as of March 2025 include:

• AUM: ₹3,468 crore
• Branches: 28
• Employees: Over 800
• Gross NPA: 1.6%
• Net NPA: 1.1%

Post-merger, UGRO’s AUM is expected to grow by 29%, taking its total AUM close to ₹15,500 crore. This addition is intended to diversify UGRO’s lending portfolio and support an accelerated push into high-yield segments such as embedded finance, emerging markets, and a new line in school finance, where UGRO anticipates ₹2,000 crore potential in mid-term asset generation.

Investment and Advisory Framework

To ensure the successful execution of the transaction:

• InCred Capital acted as the financial advisor to UGRO Capital
• SNG & Partners were engaged for legal advisory services
• PWC Services LLP conducted financial due diligence
• Legacy Growth Partners undertook tax diligence
• Profectus Capital was advised by DC Advisory and Avendus

Shachindra Nath, founder and MD of UGRO Capital, referred to the acquisition as a "strategic deployment of equity to boost instant scale and profitability".

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Expansion Potential and Market Position

UGRO is currently a key player in the co-lending ecosystem in India. Its partnerships span 17 banks and NBFCs, contributing to 42% of its AUM via off-balance-sheet co-lending and co-origination models. The inclusion of Profectus will reinforce UGRO’s ambitions to capture a 1% share of the MSME lending market in the next three years.

The acquisition also reflects UGRO’s commitment to identify relatively lower-risk, secured assets that offer higher yield and cost-efficiency. With the integration of Profectus’ secured products and expanded geographic reach, UGRO capitalises on its proprietary data analytics underwriting model.

UGRO Capital Share Price Performance

On June 18, 2025, UGRO Capital share price opened at ₹182.28 on NSE, above the previous close of ₹171.47. During the day, it surged to ₹185.00. The stock is trading at ₹178.44 as of 9:54 AM. The stock registered a significant gain of 4.06%.

Conclusion

UGRO Capital’s ₹1,400 crore acquisition of Profectus Capital is a decisive step in its growth trajectory. With an immediate uplift in AUM, profitability, and product diversification, the all-cash deal enhances UGRO’s capacity to scale secured lending operations. The complementary nature of both companies’ offerings forms a strong base for cost synergy and financial performance improvement in FY26 and beyond.

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