UGRO Capital shares jump 7% on ₹1,400-crore all-cash acquisition of Profectus Capital

Mint

18-06-2025

Shares of UGRO Capital surged over 7 percent in intraday trade on Wednesday, June 18, following the company's announcement of acquiring Mumbai-based NBFC Profectus Capital Private Limited in an all-cash deal worth ₹ 1,400 crore. The acquisition, subject to shareholder and regulatory approvals, is expected to be completed in the next two to three months.
The deal will be financed through a combination of UGRO's recently concluded ₹ 400-crore rights issue and internal accruals. UGRO may also issue compulsorily convertible debentures to fund the balance. The company said the strategic acquisition will immediately expand its assets under management (AUM) by 29 percent, increasing the total consolidated AUM to approximately ₹ 15,471 crore. Profectus brings a ₹ 3,468 crore loan book to UGRO's portfolio.
UGRO Capital announced that it will utilise the funds raised through its recent equity issuance to finance the acquisition of Profectus Capital. According to the company's statement, the capital will be directed toward building a fully secured asset base that offers immediate scale advantages without incurring origination costs. UGRO further stated that Profectus' secured lending operations are a strategic fit, aligning seamlessly with UGRO's data-centric underwriting model.
'To facilitate the discharge of purchase consideration for the proposed acquisition, the company is proposing to add financing of Profectus' acquisition as an object of the existing preferential issuance of compulsorily convertible debentures by seeking fresh approval from the board and shareholders,' UGRO said adding the deal is also subject to the approval of the Reserve Bank of India (RBI) and shareholders.
According to UGRO Founder and MD Shachindra Nath, 'This strategically priced acquisition deploys our equity raise to achieve instant scale, ₹ 115 crore in cost savings, and an annualised incremental profit of ₹ 150 crore—boosting our RoA by 0.6 to 0.7 percent.' The move is aimed at diversifying UGRO's lending base and deepening its footprint in high-yield areas like embedded finance and MSME lending.
Profectus Capital primarily focuses on secured lending products such as school financing, loans against property, and supply chain finance. Operating through 28 branches across seven Indian states, the NBFC had gross NPAs of 1.6 percent and net NPAs of 1.1 percent as of March 2025. Once the acquisition is complete, Profectus will become a wholly owned subsidiary of UGRO Capital. The two companies are expected to merge effective April 1, 2025.
UGRO's management expects the combined entity to gain from enhanced lender relationships, with access to Profectus' network of private and small finance banks.
The acquisition is structured through a share purchase agreement, with UGRO acquiring 100 percent of Profectus Capital's shares from existing shareholders. InCred Capital served as the exclusive advisor to UGRO Capital, with legal and financial due diligence support provided by SNG & Partners and PwC, respectively. Avendus Capital advised Profectus Capital and its shareholders.
Investors welcomed the acquisition news, sending UGRO Capital shares up 7 percent to an intraday high of ₹ 183.35 on the BSE. Despite the uptick, the stock still trades more than 37 percent below its 52-week high of ₹ 294, last touched in July 2024. The scrip had hit its 52-week low of ₹ 144.11 in March 2025.
UGRO Capital has had a volatile performance over the past year. The stock has declined over 38 percent in the last 12 months. In June so far, it has slipped around 1 percent after gaining 1 percent in May and over 7 percent each in April and March. Prior to this rally, the stock had posted losses for five consecutive months between October 2024 and February 2025.
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