MUMBAI: Ugro Capital has pulled off a serious power play in India’s NBFC sector. The MSME-focused Datatech lender announced it would acquire 100 per cent of Profectus Capital in an all-cash deal worth Rs 1,400 crore. The transaction, funded through UGRO’s recently raised equity proceeds, is expected to add Rs 150 crore in annualised profits and Rs 115 crore in cost savings.
This strategic buyout adds immediate heft to Ugro’s balance sheet with a 29 per cent AUM spike and gives the lender a stronger foothold in high-yield emerging markets and school financing—the latter alone carrying a medium-term potential of Rs 2,000 crore. The deal also diversifies Ugro’s asset mix, leaning further into secured lending with zero incremental origination cost.
As part of the transaction, Ugro signed a share purchase agreement to acquire Profectus Capital Private Limited from its existing shareholders, making the company a wholly owned subsidiary. The acquisition is subject to customary approvals, including clearance from the RBI and shareholders.
“This strategically priced acquisition deploys our equity raise to achieve instant scale and Rs 115 crores cost savings and annualised incremental profitability of Rs 150 Crores thus boosting ROA by 0.6–0.7 per cent. Integrating Profectus’ school finance expertise unlocks Rs 2,000 Crores growth potential and strengthens our secured asset mix – accelerating our journey to become India’s largest MSME lender through enhanced emerging markets and embedded finance capabilities”, said Ugro Capital founder & MD Shachindra Nath.
Profectus Capital currently manages Rs 3,468 crore in assets across a seven-state footprint, supported by a 28-branch network and over 800 employees. Its gross NPA stands at 1.6 per cent, with a net NPA of 1.1 per cent.
Profectus Capital ED & CEO K.V. Srinivasan added, “The coming together of the two organisations would be beneficial owing to the synergies and complementarity of the businesses, which should result in greater operational efficiency and profitability for the business. We at Profectus, thank our investors for their unwavering commitment and support throughout our journey, which has helped us to establish a very strong process-oriented business with an excellent portfolio quality”.
Both companies will retain their existing operations and business strategies during the integration phase.
Incred Capital acted as the exclusive advisor to Ugro Capital, with SNG & Partners serving as legal counsel. Pricewaterhousecoopers Services LLP conducted the financial due diligence, while Legacy Growthpartners handled the tax due diligence.