UGRO Capital Announces ₹400 Crore Rights Issue to fuel MSME Growth
Mumbai, India – UGRO Capital, a leading DataTech-driven MSME (Micro, Small & Medium Enterprises) financing non-banking financial company (NBFC), has officially announced the final terms of it’s Rights Issue.
This move, approved by the Securities Allotment & Transfer Committee, follows the Board’s May 20, 2025, decision to raise ₹915 Crore through a preferential issuance of compulsory convertible Debentures (CCDs), alongside a proposal to offer existing public shareholders rights issue of up to ₹400 Crore.
Details Of the Rights Issue
UGRO Capital will offer new equity shares, totaling up to ₹400 Crore, at a price of ₹162 per share. This pro-rata offering gives existing public shareholders a chance to maintain their ownership stake, preventing dilution as the company expands its balance sheet and strengthens its DataTech capabilities to serve India’s underserved MSMEs.
Pro Tip: Understanding rights issues is crucial for shareholders. It allows you to buy additional shares at a discounted price,possibly increasing yoru investment in a company you believe in.
Strong Investor Confidence
The Rights issue has garnered strong commitments totaling over ₹250 Crore. This includes ₹150 Crore from IFU (Investment Fund for Developing Countries, Denmark), and ₹34 Crore from the Promoter, Promoter-group, and employees. This substantial commitment underscores the confidence that institutional investors and management have in UGRO Capital’s strategy.
This initiative builds on UGRO Capital’s recent strong performance, which saw assets Under Management (AUM) grow to ₹12,003 Crore and profit before tax more than double to ₹203 Crore in FY 2024-25, while maintaining a healthy capital adequacy ratio.
Management’s Outlook
Mr. Shachindra Nath, Founder & Managing Director of UGRO Capital, stated, “At UGRO Capital, we are consistently adding ₹3,000 Crore in AUM year-on-year. Given the strong growth momentum and steady portfolio quality we are witnessing, this capital raise would ensure that our growth trajectory remains unhindered.”
“By offering every shareholder the opportunity to subscribe at ₹162 per share, which is in line with the pricing of preferential allotment of CCD, we are ensuring that public Shareholders have the opportunity to participate in the growth journey of the company as well. Our growing AUM and profitability, coupled with a strengthened capital adequacy ratio post this infusion, position UGRO to scale its credit delivery and support the financial needs of small businesses across India.”
Advisors
InCred Capital is serving as the financial advisor, and SNG & Partners is the legal advisor for this Rights Issue, as well as the previous equity capital raise.
Did You Know? MSMEs contribute nearly 30% to India’s GDP, making them a vital part of the Indian economy. UGRO Capital’s focus on this sector is crucial for driving economic growth.
UGRO Capital: Solving The Unsolved
UGRO Capital limited is a DataTech lending platform listed on NSE and BSE. It aims to “Solve the Unsolved” for the small business credit gap in India, leveraging its extensive distribution reach and DataTech approach.
technological Prowess
The Company’s expertise in Data Analytics and robust Technology architecture enables customized sourcing platforms for each sourcing channel, like GRO Plus, GRO Chain, GRO Xstream, and GRO X application
The credit scoring model GRO Score (3.0), which uses an AI/ML-driven statistical framework to risk-rank customers, is revolutionizing MSME credit by providing on-tap financing.
Co-Lending Model
UGRO has implemented a Co-lending model, prevalent in the West, through Co-Lending relationships with 17 Banks and NBFCs. It has built a sizeable off-balance sheet asset, with 42% of its AUM through Co-lending and Co-originating partners and the GRO Xstream platform.
Backed by marquee institutional investors, UGRO Capital aims to capture 1% market share over the next three years.
Reader Engagement: How do you think this rights issue will impact the growth of MSMEs in India? Share your thoughts in the comments below!
Financial Overview
| Financial Metric | Value (FY 2024-25) |
|---|---|
| Assets Under Management (AUM) | ₹12,003 Crore |
| Profit Before Tax (PBT) | ₹203 Crore |
| Rights Issue Size | ₹400 Crore |
| Preferential CCD Issuance | ₹915 Crore |
Understanding Rights Issues: An Evergreen Perspective
Rights issues are a common method for companies to raise capital. They offer existing shareholders the chance to buy new shares, often at a discount, before they are offered to the general public.
This mechanism not only helps companies raise funds but also allows shareholders to maintain their percentage ownership in the company. When considering whether to participate in a rights issue, investors should evaluate the company’s growth prospects, the use of funds, and their own financial situation.
The Importance Of Capital Adequacy Ratio
Capital Adequacy Ratio (CAR) is a crucial metric for NBFCs like UGRO Capital. it measures a company’s ability to meet its obligations by comparing its capital to its risk-weighted assets.
A healthy CAR indicates financial stability and the ability to absorb potential losses, making it an critically important factor for investors to consider. As of recent data, the Reserve Bank of India (RBI) requires NBFCs to maintain a minimum CAR of 15%. UGRO Capital’s commitment to maintaining a healthy CAR underscores its focus on financial prudence and lasting growth.
Frequently Asked Questions (FAQ)
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What Is A Rights Issue?
A Rights Issue is an offering of new shares to existing shareholders, allowing them to buy additional shares in proportion to their current holdings, frequently enough at a discounted price.
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Why Is UGRO Capital Doing A Rights Issue?
UGRO Capital is conducting a Rights Issue to raise capital for further expansion and to support the financial needs of small businesses across India.
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How Much Is UGRO Capital Planning To Raise Through The Rights Issue?
UGRO Capital aims to raise up to ₹400 Crore through the Rights issue, offering new equity shares at ₹162 per share.
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Who can Participate In The UGRO Capital Rights Issue?
The UGRO Capital Rights Issue is available to existing public shareholders, allowing them to maintain their stake in the company.
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What Is The Significance Of The Preferential CCD Issuance Alongside The Rights Issue?
The preferential CCD issuance of ₹915 Crore, combined with the Rights Issue, strengthens UGRO Capital’s capital base, enabling it to pursue its growth trajectory and support India’s underserved MSMEs.
Reader Engagement: What are your thoughts on UGRO Capital’s strategy? Leave your comments below and share this article with your network!
