UGRO Capital said that it will soon initiate the process for the merger of Profectus into the parent entity. The proposal will be subject to board and shareholder approvals
The deal will shore up UGRO’s consolidated AUM by 29% to INR 15,471 Cr, and open up a new INR 2,000 Cr medium-term opportunity in school financing for the listed NBFC
This comes six months after UGRO first said that it would acquire Profectus Capital from UK-based PE firm Actis for INR 1,400 Cr
Listed non-banking finance company (NBFC) UGRO Capital has completed the acquisition of rival lending platform Profectus Capital in an INR 1,400 Cr all-cash deal.
With this, Profectus has become a wholly-owned subsidiary of UGRO Capital. However, UGRO Capital said that it will soon initiate the process for the merger of Profectus into the parent entity. The proposal will be subject to board and shareholder approvals.
Till formal approval of the merger, both companies will continue operating independently
In a statement, the listed NBFC said that the acquisition will bring Profectus’ assets worth INR 3,468 Cr into its kitty. With this, UGRO expects its consolidated assets under management (AUM) to rise 29% to INR 15,471 Cr. Additionally, the listed company also sees an immediate INR 150 Cr in annualised profit accretion from the transaction.
“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 listed NBFC also claimed that the acquisition will shift its consolidated secured asset mix to 75%, adding that the deal will also open up a new INR 2,000 Cr medium-term opportunity in school financing.
“… 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.
This comes six months after the listed NBFC first said that it would acquire Profectus Capital from UK-based private equity (PE) firm Actis for INR 1,400 Cr. It received Reserve Bank of India’s (RBI) approval for the deal in September this year.
Founded in 2017 by former Reliance Home Finance executive KV Srinivasan, with backing from Actis Capital, Profectus Capital offers financing solutions, primarily secured loans, to MSMEs for business expansion and working capital needs. It also offers loans to schools for infrastructure upgradation.
On the other hand, UGRO Capital was founded in 2018 by Nath. The NBFC also provides tailored credit solutions and business loans to MSMEs. UGRO has raised more than $480 Mn in funding till date and competes with the likes of lending tech startups such as Lendingkart, InCred, LoanTap, CredAble, and Money View.
On the financial front, UGRO’s net profit rose 22% to INR 43 Cr in the second quarter (Q2) of the ongoing fiscal year (FY26) compared to INR 35.5 Cr in the year ago quarter. Meanwhile, revenue from operations jumped nearly 38% to INR 455.4 Cr in the quarter under review as against INR 330.2 Cr in Q2 FY25.
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