UGRO Capital to acquire Profectus Capital in a ₹1,400 crore all-cash deal | Mint

Mumbai: UGRO Capital, a data-tech MSME (micro, small and medium enterprises) lending platform, is set to acquire Profectus Capital Pvt. Ltd from UK-based private equity firm Actis’ companies Actis PC (Mauritius) and Actis Investment (Mauritius) in an all-cash deal amounting to ₹1,400 crore, the lender notified the exchanges late on Tuesday.

UGRO will use the proceeds from the recent equity raise for the acquisition, with the objective of deploying capital into a “fully secured asset portfolio delivering instant scale benefits with zero origination costs,” it said in a release. Profectus’ secured lending business complements and aligns with UGRO’s data-driven underwriting platform.

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“To facilitate the discharge of purchase consideration for the proposed acquisition, the company is proposing to add financing of Profectus’ acquisition as an object of the existing preferential issuance of compulsorily convertible debentures by seeking fresh approval from the board and shareholders,” UGRO said adding the deal is also subject to the approval of the Reserve Bank of India (RBI) and shareholders.

InCred Capital acted as advisor to UGRO Capital on this acquisition, and SNG & Partners was the legal counsel. PriceWaterHouse Coopers Services LLP was appointed for financial due diligence, and Legacy Growth Partners for tax due diligence. DC Advisory and Avendus were the advisors for Profectus.

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After the acquisition, Profectus will become a wholly-owned subsidiary of UGRO Capital, and is estimated to add around ₹150 crore of annualized profit to UGRO, it said, adding that this makes it a “capital adequacy accretive transaction”. The companies expect significant geographic and product alignment in secured LAP (loans against property), machinery finance, and supply chain finance, which is seen as driving operational efficiencies.

“This strategically priced acquisition deploys our equity raise to achieve instant scale and  ₹115 crore cost savings and annualized incremental profitability of ₹150 crore, thus boosting ROA (return on assets) by 0.6–0.7%,” said Shachindra Nath, founder and managing director of UGRO Capital.

As of March 2025, Profectus had assets under management of ₹3,468 crore and a presence across seven states through a 28-branch network and over 800-member team. The company’s gross non-performing assets (NPA) ratio is 1.6%, and its net NPA is 1.1%.

Acquiring company UGRO’s AUM is expected to increase 29% post-deal, which is expected to help diversify its portfolio and accelerate expansion of the high-yield ‘emerging markets’ and ‘embedded finance’ business lines. The deal will also add a new product to the company’s bouquet—school finance—where UGRO sees a medium-term financing potential of ₹2,000 crore, the company said.

As of March 2025, UGRO Capital had assets of ₹12,003 crore, up 33% on the previous year. Net disbursements for the year were 57% higher at ₹2.436 crore. The lender posted a profit after tax of ₹40.5 crore for the year. The company’s gross NPA ratio was 2.3%, and its net NPA ratio was 1.6% as of the end of FY25.

UGRO is a major player in the co-lending market in India with relationships with 17 banks and non-banking financial companies (NBFCs). A sizeable 42% of the company’s AUM is off-balance sheet through co-lending and co-originating partners. The NBFC raised ₹900 crore of equity capital in 2018, another ₹340 crore in 2023 and ₹1,265 crore in 2024. The company aims to capture 1% market share over the next three years.