UGRO Capital acquires Profectus to scale MSME lending

By Vriti Gothi

UGRO Capital, an NBFC focused on MSME lending, has signed a definitive agreement to acquire 100% of Profectus Capital in an all-cash deal, expanding its secured lending portfolio and MSME reach across India.

The all-cash transaction, funded through UGRO’s recent equity raise, transforms UGRO’s market presence by instantly scaling its secured lending portfolio with zero origination costs. Upon closing, Profectus will operate as a wholly owned subsidiary, strengthening UGRO’s customer-first, data-driven approach to financial inclusion for underserved MSMEs across India.

This acquisition is projected to boost UGRO’s Assets Under Management (AUM) by 29%, fortifying its footprint in high-yield segments such as School Financing, LAP, Machinery Finance, and Supply Chain Finance. UGRO estimates this strategic integration to deliver:

• $17.37 million in annualised incremental profitability
• $13.32 million in operating cost savings

The transaction is capital adequacy accretive and aligns with UGRO’s long-term roadmap of achieving sustainable, profitable scale while deepening penetration in India’s underserved MSME segments.

Profectus Capital brings with it a robust $401.8 million AUM (as of March 2025), a network of 28 branches across 7 states, and an 800+ member team. The company has consistently delivered stable portfolio growth with industry-best asset quality, maintaining gross and net NPAs at 1.6% and 1.1%, respectively.

Profectus’ strength in secured lending is deeply synergistic with UGRO’s proprietary data-driven underwriting engine and sectoral expertise, enabling end-to-end digitised credit delivery at scale.

Mr. Shachindra Nath, Founder and Managing Director of UGRO Capital, said, “This acquisition is a transformative step in UGRO’s mission to become India’s largest MSME lender. It leverages our recent equity raise to deliver instant scale, $17.37 million in incremental profitability, and $13.32 million in operational efficiencies, all while expanding our product suite with Profectus’ strong school finance capabilities. This is a values-aligned move that strengthens our secured asset base and accelerates our journey in Emerging Markets and Embedded Finance.”

Mr. K.V. Srinivasan, Executive Director and CEO of Profectus Capital, said, “The synergy between Profectus and UGRO will unlock significant value for our customers, employees, and the broader ecosystem. With shared values and complementary capabilities, this integration creates a powerful platform to deliver inclusive, impact-driven finance to India’s MSMEs.”