UGRO Capital raises ₹380 crore from FMO for MSME lending
- UGRO Capital raised ₹380 crore via NCDs fully subscribed by Dutch bank FMO
- This marks FMO's third investment in under three years, totaling ₹890 crore commitment
- Total development finance raised exceeds ₹1,300 crore from multiple impact investors
- Funds target women-led, youth-led, rural SMEs and eligible green projects
*this image is generated using AI for illustrative purposes only.
UGRO Capital has raised ₹380 crore through the issuance of senior, secured, rated, listed, redeemable and transferable Non-Convertible Debentures (NCDs). The transaction was fully subscribed by Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), the Dutch entrepreneurial development bank.
The five-year tenor of the new instrument matches the long-duration secured lending UGRO extends to small businesses in Tier-3 towns and beyond. This is FMO's third investment in UGRO Capital in under three years, following NCD investments of ₹250 crore in December 2023 and ₹260 crore in February 2025.
Funding structure and deployment
The new issuance brings FMO's cumulative commitment to UGRO to ₹890 crore. It also pushes the total development finance and impact capital raised by the company to over ₹1,300 crore from institutions including IFU, ADB, Triple Jump, BlueOrchard, responsAbility, Calvert Impact Capital, Enabling Qapital, GMO, WaterEquity and MicroVest.
Proceeds from the latest tranche will be deployed towards financing for women-owned and women-led SMEs, youth-owned and youth-led SMEs and rural SMEs. The funds will also contribute towards financing or refinancing eligible green projects aligned with FMO's sustainability approach.
What the Numbers Show
UGRO’s funding strategy reveals a deliberate shift toward diversified, long-tenor institutional capital that reduces dependency on the domestic banking system. With over ₹1,300 crore raised from development finance institutions and impact-focused investors, the company has anchored its growth in relationships driven by measurable social outcomes rather than short-term liquidity needs. This structural diversification supports its ability to scale lending in underserved geographies where traditional banks have limited presence.
Portfolio performance and impact
In Q1 FY27, UGRO’s GROx platform disbursed ₹1,853 crore, with assets under management (AUM) rising 32% quarter-on-quarter to ₹3,003 crore. The platform serves approximately 3.4 lakh active customers and originates more than 60,000 loans every month.
The Emerging Market network comprises 317 branches across 13 states, supported by more than 2,500 employees. About four-fifths of this portfolio sits in Tier-3 geographies and beyond. Together, the Emerging Market and GROx portfolios accounted for 46% of total AUM as on June 30, 2026, up from 32% in December 2025.
| Impact indicator | Detail | Basis / period |
|---|---|---|
| Emerging Market branches | 317 branches across 13 states; ~80% of AUM in Tier-3+ | Q1 FY27 |
| GROx active customers | ~3.4 lakh; >60,000 loans/month | Q1 FY27 |
| Borrowers with woman owner/co-owner | 76% | Social Impact Report 2024-25 |
| Borrowers reporting revenue growth | 88% | Social Impact Report 2024-25 |
| Direct livelihoods supported | ~2 lakh | Management estimate, Dec 2025 |
| Average loan size | ~₹18 lakh (Emerging Market); ~₹1 lakh (GROx) | Q1 FY27 |
| Sector AUM | Clean energy: ₹374 cr; Healthcare: ₹430 cr; Water/Sanitation: ₹268 cr; Education: ₹102 cr | Dec 2025 |
Shachindra Nath, Founder, Vice Chairman and Managing Director, stated that development capital now views MSME lending in India as a segment that generates strong returns without trade-offs against social impact. Juan Jose Dada Ortiz, Co-Chief Investment Officer at FMO, noted that UGRO’s data-driven approach enables it to reach businesses often underserved by the formal financial sector.
Historical Stock Returns for UGRO Capital
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.31% | -1.79% | -10.50% | -7.28% | -51.24% | -27.25% |
How might UGRO's increasing reliance on international development finance impact its sensitivity to global interest rate fluctuations compared to domestic competitors?
What specific credit risk mitigation strategies is UGRO implementing to manage the high concentration of its portfolio in Tier-3 and rural geographies?
Could the success of UGRO's data-driven lending model in underserved markets prompt traditional Indian banks to expand their own non-banking financial arms or partnerships?
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