UGRO Capital Raises INR 1,265 Cr Via CCDs & Warrants; 5% Lower Than Intended

Over a month after announcing an intended capital raise, listed non-banking finance company (NBFC) UGRO Capital intimated the bourses that it has completed the fundraise and allotted compulsory convertible debentures (CCDs) and warrants worth INR 1,265 Cr ($151.6 Mn). 

To net the funds, the company allotted CCDs worth INR 258 Cr and warrants worth INR 1,007 Cr to investors. Its existing backer poured in INR 500 Cr via warrants, while Singapore based fund Aregence Capital among other family offices also participated in the round. 

UGRO’s founder Shachindra Nath, along with its board members and management team also subscribed to the warrants issue. At the time of announcing its intention to raise the capital, the company said in a statement that its internal team members have earmarked INR 16.25 Cr towards the warrants. 

Subscribers of the issue will be paying 25% of their commitments right now and are slated to cough up the rest within a year and a half. Further, the warrants can be exercised within 18 months from the date of allotment. Closing the equity raise round, UGRO had earlier said that it will be effectively locking the capital requirements for both the current year’s growth and next year’s growth.

On May 2, UGRO’s board of directors approved a capital raise to the extent of INR 1,333 Cr by way of issuance of 12% fully paid-up unsecured CCDs of the Company, having face value of INR 10 each at an issue price of INR 264 per CCD. The sum total of the CCDs was up to INR 275 Cr. 

Besides, its convertible warrants, with a face value of INR 10 at an issue price of INR 264, summed up to INR 1,058 Cr. After getting shareholders approval on June 1, the company opened up its offer to proposed allottees on June 4 and closed the offer on June 17. 

In their announcement, the company said its shareholders’ approval for the fundraise came amid “uncertainty surrounding the election results and the resultant market fluctuations”. It also said that investors who were ineligible due to regulatory reasons weren’t able to participate in this. 

“Securing this capital raise amidst market ups and downs speaks volumes about the sheer trust our investors have in us… We’re now closer to our goal of helping all small businesses in India,” Nath said. 

It is pertinent to note that the market conditions had gone for a swing during the time of elections. With most exit polls projecting a landslide victory for the incumbent Prime Minister Narendra Modi-led National Democratic Alliance (NDA), markets rallied to an all time highs.  

Benchmark indices Sensex and Nifty50 touched their all-time highs, rising 3.39% to 76,468.78 and 3.25% to 23,263.90 a day prior to election results (June 3). However, with outcomes of the elections differing significantly from the predictions, the benchmark indices each dipped by over 5% within a day. 

Despite the reduction in its intended fundraise, the NBFC has now aggregated a little over $480 Mn in its lifetime. Prior to its third fundraise, the company had netted $330 Mn prior. 

Founded in 2018 by Nath, UGRO Capital is a lending tech platform listed on the stock exchanges. It has developed proprietary SME sector-specific statistical scorecards for 8 sectors that enables 60 minutes loan disbursal of up to INR 5 Cr. 

Its net profit soared 132.83% to INR 32.69 Cr in the quarter ended March 2024 (Q4 FY24) compared to INR 14.04 Cr in the year-ago period. Meanwhile, operating revenue in the quarter also jumped 54.29% to INR 322.41 Cr from INR 208.97 Cr in Q4 FY23.

Post the announcement, shares of UGRO were trading at INR 271.3, 2.5% lower than previous close of INR 278.25, during intraday trading on Tuesday.