UGRO Capital, a technology-driven non-banking financial company (NBFC) focused on supporting micro, small, and medium enterprises (MSMEs), has received the Reserve Bank of India’s (RBI) approval to acquire Profectus Capital Private Limited. The all-cash deal is valued at ₹1,400 crore and marks a significant step for UGRO in expanding its lending capabilities and strengthening its position in India’s financial ecosystem. This acquisition is expected to enhance the company’s reach and offer more tailored financial solutions to small businesses across the country.
Strengthening Financial Reach
The merger is slated to be effective from April 1, 2025, with completion expected by October 31, 2025. After the acquisition, Profectus Capital will operate as a subsidiary of UGRO Capital. Together, the combined entity will manage assets worth over ₹15,000 crore and serve more than 2 lakh MSMEs nationwide. This consolidation is not just a financial transaction; it represents a strategic expansion that will allow UGRO to offer more robust lending products, improve operational efficiency, and provide enhanced services to its clients. The integration will also help UGRO strengthen its portfolio of secured loans, such as loans against property, machinery finance, and supply chain finance, providing a wider range of solutions to meet diverse business needs.
Driving Profitability and Efficiency
The acquisition is expected to significantly boost profitability and operational efficiency for UGRO. Analysts estimate that the combined entity could generate around ₹150 crore in annualized profit post-merger. At the same time, operational efficiencies are projected to result in cost savings of approximately ₹115 crore. These improvements are expected to come from streamlined processes, better technology integration, and synergies in lending operations. By combining resources and expertise, UGRO Capital aims to not only strengthen its financial standing but also deliver more effective and affordable credit solutions to small businesses that are often underserved by traditional banks.
AI and Data-Driven Financing
The deal also opens up opportunities for UGRO to enter new segments and expand its product offerings. One of the notable areas of growth is school financing, with medium-term loan potential estimated at ₹2,000 crore. Additionally, the merger will allow UGRO to diversify its offerings across sectors such as healthcare, education, chemicals, and food processing. By leveraging data analytics and artificial intelligence, UGRO aims to provide customized loan solutions that meet the unique needs of MSMEs, helping them scale their operations and achieve sustainable growth.
RBI Approval Secured
UGRO Capital’s acquisition of Profectus Capital is more than just a business deal; it is a strategic initiative to empower India’s small businesses. With the RBI’s approval in place, UGRO is set to proceed with the integration, which will strengthen its market position and expand its footprint across the country. This deal reflects UGRO’s commitment to bridging the credit gap for MSMEs and supporting their growth with innovative financial solutions. As the merged entity begins operations, it is expected to create a positive impact on the MSME sector, providing them with access to timely and flexible funding, which is critical for business expansion and long-term success.