With the purchase of MyShubhLife (MSL), a Bengaluru-based embedded finance platform by UGRO Capital, a data-driven non-banking financial company (NBFC) that provides loans to micro, small, and medium enterprises (MSMEs), strategically. This transaction, valued at Rs 45 crore, was done with a mix of cash and stock models. UGRO Capital has paid Rs 28 crore, which will pay Rs 17 crore later to have whole ownership. Here we are talking about UGRO Capital Gets a Hold of the Embedded Finance Platform – MyShubhLife in a Historical Rs 45 Crore Deal.
We are discussing UGRO Capital Gets a Hold of the Embedded Finance Platform – MyShubhLife in a Historical Rs 45 Crore Deal:
The Strategic Rationale of UGRO Capital
UGRO Capital, an innovative fintech player, has always had in mind the unlimited power held in the combination of data-driven lending and embedded financial solutions, targeting specifically the needs of small retailers and distributors. Through acquiring MSL, an innovative platform offering credit products and services, UGRO Capital seeks to establish itself as a real leader, taking the forefront of the rapidly ever-changing industry.
Monish Anand, our co-founder and CEO, is very enthusiastic about the joint venture, as explained by the founder and CEO of MyShubhLife. “Our mission is to drive innovation as a driver of financial services with disruptive technology facilitating the integration of contextual and new credit products for small-scale shopkeepers and distributors across the country.”
UGRO Capital’s Varied Products and Wide Coverage
The main differentiator of MSL is its adaptable solution, which suits the unique operations of small business companies. These include:
- Day-to-day or weekly installment options
- Overdraft facilities
- Robust underwriting capabilities
- Extensive distribution network
Through the merger of MSL’s innovative products and UGRO Capital’s financial power, the combined entity will have the capacity to acquire at least 200,000 new retailers within three years. The expected additional Assets Under Management (AUM) is identified at Rs 1,500 crore.
Demonstrated Experience and Strong Alliance Builds
Fintech lending, MSL has demonstrated its dominance in the segment by originating over 15 million merchants and entering into strategic alliances with giant ventures such as – Pine Labs, Fino, Airtel Payments Bank, Mobikwik, Spice Money, and EasyPay. MSL’s partnerships have enabled it to impact a wider market by offering financing solutions to an increasing number of small business owners nationally.
Ambitious Growth Projections of UGRO Capital
With the acquisition of MSL, UGRO Capital is on the way to enormous growth. The company anticipates a PAT of Rs 100 Crore in the next three years, a symbol reflecting their strategic partnership.
Regulatory Compliance and Consolidation
RBI regulation requires only one NBFC license per single group entity. MSL will relinquish its NBFC license to integrate with UGRO Capital. This gesture clearly signals the two organizations’ intentions to comply with regulatory protocols and exploit their cooperation synergies.
Fueling the MSME Lending Landscape
Shashindra Nath, visionary founder and managing director of UGRO Capital, reiterated the power this deal could have over the country’s MSME finance sector in the next two years: “In the next two years, UGRO Capital will become the largest MSME financier in the country and enter the embedded financing segment through this unique acquisition that can help almost Rs 8,000 to 10,000 crore.”
Monish Anand, the founder and CEO of MSL, echoed this sentiment, highlighting the complementary nature of the partnership: With our financial model fit into UGRO’s balance sheet, we can now scale our operations massively, which translates into higher impact.
Consolidation in the Fintech Lending Ecosystem
This strategic acquisition happens when consolidation becomes more popular in India’s fintech lending space. InCred, which used to own InCredited, a consumer lending startup, is an example of how the sector, as it matured, started to focus on complementary cooperation.
As the digital lending ecosystem rises beyond the pandemic turbulence, stable players like Indifi and Lendingkart have become profitable in the previous two financial years. UGRO Capital’s purchase of MSL marks a new dawn in a flux landscape in which improved innovation, efficiency, and financial inclusion are key features.
Raising Equity and Investors’ Confidence
Besides this, UGRO Capital has also proposed the issue of CCDs for a fund amount of Rs 1332.66 crores. Thus, getting approval from the present private equity investors, including Samena Capital, which pumped in Rs. 500 crores worth of Warrants, has made it possible. Together, the founder and the management member of UGRO Capital have committed Rs 16.25 crore to Warrants, showcasing their utmost faith in the firm’s expansion potential.
Robust Financial Performance
The financial statement of UGRO Capital confirms that the decision to buy MSL was strategic. The company achieved a phenomenal increase in Profit After Tax (PAT) of 200% in FY 2024 compared to FY 2023, which stood at Rs 39.8 crore and jumped to Rs 119.3 crore. The company’s performance was further enhanced by an impressive 58 % spike in total income to Rs 1,081.7 crores, against Rs 683 crores in the preceding year.
Dynamics and investor support, in addition to valuation
The acquisition of MSL in the startup resulted in a valuation reduction of Rs. 240 crore, a previous level. However, it still emphasizes the long-term strategic vision of both firms. Earlier, MSL had already raised Rs. 147 crores from respected investors like Omidyar Network India, Gojo, and Saama India IV, pointing to the strong belief of the investors in the MSL’s potential.
FAQ’s
What is MyShubhLife?
MyShubhLife is an embedded finance platform offering various financial products and services integrated into various non-financial applications.
What are the benefits of embedded finance?
Embedded finance enables seamless access to financial services within everyday transactions, enhancing convenience and accessibility for consumers and businesses.
Why did UGRO Capital acquire MyShubhLife?
UGRO Capital’s acquisition of MyShubhLife aligns with its strategic objectives to diversify its product offerings and tap into the growing embedded finance market.
How will the acquisition benefit customers?
Customers can expect to access a wider range of financial services seamlessly integrated into their day-to-day activities, enhancing their overall banking and payment experience.
What are the plans for MyShubhLife under UGRO Capital’s ownership?
Under UGRO Capital’s ownership, MyShubhLife aims to leverage its expertise in embedded finance to drive innovation, expand its product portfolio, and reach new customer segments.
Conclusion
The acquisition of MyShubhLife by UGRO Capital stands as a milestone in MSME lending. It reflects a combination of an NBFC’s cutting-edge technologies and a fintech startup’s creative talent. Such collaboration can bring new perspectives and prospects for Financial inclusion and economic sustainability for small businesses in India.
With the growing enthusiasm for entrepreneurship in the country, collaborations like these serve as a stepping stone, building towards a brighter future where industry and finance work together to offer an improved, inclusive, and supportive environment to all the participants. The path ahead is certainly prosperous, therefore, with UGRO Capital and MyShubhLife, the duo will be the leaders of changing the lending concept for the Indian MSME’s revolutionary business space.
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