UGRO Capital to Acquire Profectus Capital for INR 1,400 Cr in Strategic All-Cash Deal
The acquisition will be funded through UGRO's recently completed equity raise and is expected to be completed in a single tranche upon regulatory approvals, including those from the Reserve Bank of India and shareholders.
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Non-banking financial company (NBFC) UGRO Capital has announced that it will acquire Profectus Capital Private Limited in an all-cash deal worth INR 1,400 crore. The transaction, structured as a 100% equity buyout, will make Profectus a wholly owned subsidiary of UGRO Capital, furthering its mission to bridge the credit gap for MSMEs in India.
The acquisition will be funded through UGRO's recently completed equity raise and is expected to be completed in a single tranche upon regulatory approvals, including those from the Reserve Bank of India and shareholders.
"This strategically priced acquisition deploys our equity raise to achieve instant scale, INR 115 crore in cost savings, and INR 150 crore in annualized incremental profitability, boosting ROA by 0.6–0.7%," said Shachindra Nath, Founder and Managing Director of UGRO Capital. "Integrating Profectus' school finance expertise unlocks INR 2,000 crore growth potential and strengthens our secured asset mix – accelerating our journey to become India's largest MSME lender."
Profectus Capital currently manages assets worth INR 3,468 crore, has a 28-branch network across seven states, and employs more than 800 people. With gross and net NPAs at 1.6% and 1.1% respectively, the company claims to have built a stable, secured lending portfolio aligned with UGRO's data-driven underwriting platform.
The acquisition will immediately boost UGRO's Assets Under Management (AUM) by 29% and enhance its offerings across School Financing, Machinery Finance, Supply Chain Finance, and Secured LAP segments. UGRO expects operational efficiencies and expanded geographic reach, estimating total synergy benefits to significantly enhance capital adequacy and return on assets.
"This merger brings together two like-minded platforms focused on quality and innovation," said K V Srinivasan, CEO of Profectus Capital. "We thank our investors for their continued support and look forward to scaling new heights with UGRO."
Both companies will maintain their current operations during the integration period. UGRO has sought board and shareholder approval to include Profectus' acquisition in its existing issuance of compulsorily convertible debentures.
Advisors to the transaction include InCred Capital (financial), SNG & Partners (legal), PwC Services LLP (financial due diligence), and Legacy Growth Partners (tax due diligence).
Listed on NSE and BSE, UGRO Capital leverages its DataTech lending platform and partnerships with 17 banks and NBFCs to drive innovative financing solutions for India's underserved MSME sector.
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