UGRO Capital jumps on acquiring Profectus Capital
UGRO Capital added 3.15% to Rs 176.70 after the firm has informed that it will acquire 100% stake in Profectus Capital for Rs 1,400 crore in an all-cash deal, aiming to strengthen its position in the secured MSME lending segment.
The transaction, subject to regulatory and shareholder approvals, is expected to close within the next two to three months.
The acquisition of Profectus Capital is strategically aimed at enhancing UGRO Capitals four core NBFC pillars. It is expected to result in an immediate 29% growth in assets under management (AUM), significantly diversifying the combined loan book and accelerating expansion into high-yield Emerging Markets and Embedded Finance segments.
The deal also marks UGROs entry into school financing, with an estimated medium-term potential of Rs 2,000 crore. According to the company, the acquisition offers strong geographic and product alignment, particularly in secured loan against property (LAP), machinery finance, and supply chain finance.
This alignment is projected to drive operational efficiencies, with expected cost savings of Rs 115 crore and an incremental profitability boost of Rs 150 crore. Post-merger, UGRO anticipates a 0.6% to 0.7% increase in return on assets (ROA). The strengthened asset mix, with a higher share of secured assets, is expected to support the continued scaling of its Emerging Market and Embedded Finance verticals.
The proposed acquisition is subject to approval from the Reserve Bank of India (RBI) concerning the change in control and management of Profectus Capital.
The total consideration for the acquisition is Rs 1,398.60 crore, payable in cash in a single tranche upon closing. The acquisition will result in the purchase of 100% shareholding of Profectus Capital.
The transaction does not qualify as a related party transaction. As for the issuance of shares, the consideration for the acquisition will be settled through a cash payment. Therefore, details regarding the issue price and class of shares issued are not applicable, as no shares are being issued in this transaction.
UGRO Capital is a pioneering DataTech NBFC specializing in MSME and small business financing. By leveraging advanced data analytics and an extensive distribution network, it bridges the vast small business credit gap in India, delivering tailored credit solutions to micro, small, and medium enterprises (MSMEs) across the country.
The company reported 24.04% jump in standalone net profit to Rs 40.55 crore in Q4 FY25 as against Rs 32.69 crore posted in Q4 FY24. Total income increased 24.83% YoY to Rs 412.44 crore in the quarter ended 31 March 2025.
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