MSME Lender U GRO Capital Secures USD 30 Million From Dutch Bank Through NCDs

U GRO Capital, a DataTech Non-Banking Financial Company (NBFC) specializing in micro, small, and medium enterprises (MSME) lending, has secured USD 30 million (around INR 250 crore) through the issuance of Non-Convertible Debentures (NCDs). The funding came from FMO, the Dutch entrepreneurial development bank, which fully subscribed to the INR-denominated NCDs.

U GRO Capital has been actively addressing the credit gap in India's MSME sector, providing credit to over 80,000 small businesses in the past five years. The company emphasizes its role in facilitating economic growth and employment through its lending initiatives.

Diversified Funding Sources

Highlighting the recognition of its Impact Financing program, U GRO Capital revealed that it received INR 240 crore in equity capital from Investment Fund for Developing Countries (IFU) in May 2023. Additionally, 20 per cent of its total borrowings are sourced from Development Financial Institutions and Impact Funds globally, including entities like ResponsAbility, Calvert Impact Capital, Enabling Qapital, SIDBI, and others.

U GRO Capital's diversified borrowing profiles and an impact-driven business model have ensured that its liability is well diversified and not to be fully dependent upon the Banking system of India which is also the regulatory guidance. This has happened due to its unwavering commitment towards the Micro Enterprises of India and its ability to demonstrate the impact being generated by its lending to these customers.

To Meet MSME Credit Demand

Shachindra Nath, founder and managing director of U GRO Capital, commented on the collaboration, saying, “This transaction is proof of U GRO Capital’s ability to forge partnerships with and attract funding from reputed global DFIs. We share a common vision of financial inclusion with impact funding organisations and are excited to collaborate with FMO to meet the diverse financial needs of India's underserved MSMEs.”

Nath emphasized the crucial role played by impact investors in enabling U GRO Capital to bridge India's massive credit gap in the MSME sector. The company intends to leverage its technology and credit expertise through a multi-channel distribution model to continue serving MSMEs across the spectrum.

U GRO Capital, backed by notable institutional investors who injected INR 900 crore of equity capital in 2018 and an additional INR 340 crore in 2023, aims to secure a 1 per cent market share over the next three years.