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The Indian non banking financial sector has witnessed a significant development as UGRO Capital successfully concluded its acquisition of Profectus Capital. This all cash transaction, valued at Rs 1,400 crore, represents one of the notable deals in the MSME financing space and signals growing consolidation within the industry.
Transaction Details and Regulatory Clearances
The acquisition journey, announced six months prior, has now reached completion following necessary regulatory approvals. The Reserve Bank of India granted its consent in September 2025, paving the way for the final closure of the deal. Profectus Capital, previously held by Actis, a United Kingdom based private equity firm, now operates as a fully owned subsidiary under UGRO Capital.
While the acquisition has been formalized, the integration process remains ongoing. UGRO Capital has indicated its intention to pursue a complete merger with Profectus, though this step requires additional approvals from both the board of directors and shareholders. Until these formalities are completed, both organizations will maintain independent operational structures.
Financial Implications and Growth Trajectory
The acquisition brings substantial financial advantages to UGRO Capital’s balance sheet. The integration of Profectus Capital’s asset portfolio, currently valued at Rs 3,468 crore, will result in a combined Assets Under Management figure of Rs 15,471 crore. This represents an expansion of approximately 29 percent in UGRO’s lending portfolio.
From a profitability perspective, management projections indicate an immediate boost of Rs 150 crore to annual earnings. Additionally, the company expects to realize operational efficiencies worth Rs 115 crore through synergies between the two platforms. These improvements are anticipated to enhance return on assets by 60 to 70 basis points, ultimately contributing to stronger return on equity metrics for shareholders.
Strategic Advantages and Market Positioning
Beyond pure financial metrics, the transaction offers several strategic benefits. The combined entity will maintain a more conservative risk profile, with secured assets comprising 75 percent of the total portfolio. Furthermore, the deal opens access to the education infrastructure financing segment, creating potential business opportunities worth Rs 2,000 crore in school lending.
Both companies have historically focused on serving micro, small, and medium enterprises, providing working capital and business expansion financing. This acquisition enables UGRO Capital to expand its geographical reach, diversify its funding sources, and achieve greater scale in a competitive marketplace.
The successful closure of this transaction underscores the ongoing evolution and maturation of India’s NBFC sector, where strategic mergers are becoming increasingly common as companies seek growth and operational efficiency.
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