UGRO Capital Completes Rs 1,400 Cr Acquisition Of Profectus

UGRO Capital, a listed non-banking finance company (NBFC), has completed the acquisition of its rival lending platform, Profectus Capital, in an all-cash deal valued at Rs 1,400 Cr.

With this move, Profectus is now fully owned by UGRO Capital. UGRO Capital said it will soon start the process to merge Profectus with the parent company, but this will need approval from the board and shareholders.

Until the merger is officially approved, both companies will continue to operate separately.

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This comes six months after the NBFC first announced that it would buy Profectus Capital from UK-based PE firm Actis for ₹1,400 crore. The company received RBI approval for the deal in September this year.

In its statement, the listed NBFC said the acquisition will add Profectus’ assets worth ₹3,468 crore to its books. As a result, UGRO expects its total AUM to grow 29% to ₹15,471 crore. The company also expects the deal to immediately add about ₹150 crore to its annual profit.

“The integration unlocks an additional INR 115 Cr in operating synergies, expanding margins and driving a 60–70 bps improvement in RoA (return on assets), thereby accelerating UGRO’s path toward stronger long-term RoE (return on equity)…,” added UGRO Capital.

The NBFC said the acquisition will increase its share of secured assets to 75%. It also said the deal will create a new medium-term business opportunity of ₹2,000 crore in school financing.

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“Profectus brings a secured, high-quality book that immediately enhances our profitability profile, but more importantly, it gives us long-run compounding power through a better asset mix, deeper distribution and a more diversified lender base. This transaction is an investment in stability, scalability and value creation, and sets us firmly on the path to delivering consistently higher RoE for our shareholders,” said UGRO Capital founder and MD Shachindra Nath.

Profectus Capital, founded in 2017 by former Reliance Home Finance executive KV Srinivasan with support from Actis Capital, provides financing solutions to MSMEs, mainly through secured loans for business growth and working capital. It also gives loans to schools for infrastructure upgrades.

UGRO Capital, founded in 2018 by Nath, similarly offers customised credit and business loans to MSMEs.

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