New Delhi: Ugro Capital, a fintech focused on small businesses, announced on Tuesday that it plans to raise Rs 340 crore in equity capital through a combination of a preferential allotment and qualified institutional placement. The company’s board has approved the issuance of Rs 240 crore worth of shares to Investeringsfonden for Udviklingslande (IFU), a Danish sustainable development goals investment fund, on a preferential allotment basis. Additionally, through a qualified institutional placement, the company plans to raise Rs 101 crore from long-term shareholders such as insurance companies, AIFs, and other financial institutions. The company has not yet disclosed when the funds will be raised.
IFU, a Denmark government-owned fund that offers risk capital to companies in developing countries and emerging markets, has entered into a definitive investment agreement with Ugro Capital. This is the second equity capital raising round for Ugro Capital, with the first round having raised Rs 900 crore in 2018. According to Ugro Capital’s Vice Chairman and Managing Director, Shachindra Nath, the new funds will be primarily used for onward lending to MSMEs.
The fundraising round comes at a time when small businesses are seeking greater access to capital to fuel growth and stay afloat amid the ongoing economic uncertainty caused by the COVID-19 pandemic. According to a recent report by the Reserve Bank of India, micro, small, and medium enterprises (MSMEs) are facing a severe shortage of funds, with many businesses having to rely on personal savings or informal sources of credit to stay afloat. As a result, there has been a significant uptick in demand for digital lending platforms such as Ugro Capital, which specialize in providing quick and hassle-free loans to small businesses.
Ugro Capital has positioned itself as a leading player in the digital lending space, leveraging technology to streamline the lending process and offer customized loan solutions to its customers. The company’s focus on MSMEs has enabled it to carve out a niche in the market, catering to the unique needs of small businesses that often struggle to secure loans from traditional lenders. With the new funds raised through the equity capital raising round, Ugro Capital will be able to expand its lending portfolio and reach more small businesses in need of financing.
In conclusion, Ugro Capital’s latest equity capital raising round underscores the growing demand for digital lending platforms that cater to the needs of small businesses. With the funds raised, Ugro Capital will be well-positioned to continue its growth trajectory and provide much-needed capital to MSMEs in India.