URGO Capital Limited has received approval from the Reserve Bank of India for its planned acquisition of Profectus Capital Private Limited. The transaction, valued at approximately Rs 1,400 crore, represents a significant stride in UGRO’s growth ambitions and its pursuit of strengthening its secured lending portfolio.
The company confirmed that following the central bank’s clearance, and subject to customary closing formalities under the share purchase agreement. Once finalised, Profectus Capital will operate as a subsidiary of UGRO Capital, after which a merger application will be filed.
The acquisition is expected to provide immediate scale, increasing UGRO’s assets under management by nearly a third, while also diversifying its portfolio into high-yield sectors such as emerging markets and embedded finance.
It is also set to open fresh opportunities in school financing, estimated at more than Rs 2,000 crore, while deepening alignment in secured lending areas such as loan against property, machinery finance, and supply chain finance.
The synergies from the transaction are projected to deliver cost efficiencies of around Rs 115 crore and bolster annual profitability by nearly Rs 150 crore, improving return on assets by 0.6 to 0.7 per cent points once the merger is completed.
Shachindra Nath, Founder and Managing Director of UGRO Capital, hailed the approval as a pivotal step in the company’s journey.
“The Reserve Bank’s consent marks a crucial milestone in validating our strategy. The complementary portfolio of Profectus, when combined with UGRO’s DataTech underwriting strengths, will enable us to achieve stronger profitability, expand secured lending, and foster inclusive growth across India’s MSME landscape,” he said.
The £1.4 billion all-cash transaction is being financed in part through UGRO’s recent equity raise. The enlarged entity, following integration, will hold a combined AUM in excess of Rs 15,000 crore and serve more than two lakh MSMEs nationwide.
Founded with the mission of addressing India’s enduring small business credit gap, UGRO Capital has built its reputation on a distinctive DataTech-driven approach to lending.
The company has developed a suite of proprietary platforms, including GRO Plus, GRO Chain and GRO Xstream, which provide customised sourcing, co-lending, and embedded finance capabilities. Its AI- and machine-learning-powered scoring system, GRO Score 3.0, is regarded as transformative for small business financing in the country.
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