UGRO Capital Raises ₹380 Crore from FMO to Expand MSME Lending in India

BY A_ADMIN • FILED 16 Sep 2026, 4:32 PM

UGRO Capital News: UGRO Capital Limited has raised ₹380 crore from the Dutch development bank FMO through the issuance of secured, rated, listed, redeemable, and transferable non-convertible debentures (NCDs). The funding will support lending to underserved micro, small and medium enterprises (MSMEs), including women-led businesses, youth entrepreneurs and rural enterprises.

The company announced the development on September 16, 2026, in a regulatory filing with the stock exchanges.

UGRO Capital Raises ₹380 Crore Through NCD Issue

UGRO Capital has issued 38,000 senior, secured, rated, listed, redeemable and transferable NCDs, which have been fully subscribed by Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), the Dutch entrepreneurial development bank.

The new debt instrument has a tenure of five years. According to the company, the long-term funding is aligned with its secured lending activities for small businesses, particularly those operating in Tier-3 towns and beyond.

This marks FMO’s third investment in UGRO Capital in less than three years. Previous investments included:

₹250 crore in December 2023.
₹260 crore in February 2025.
₹380 crore in September 2026.

Following the latest investment, FMO’s cumulative commitment to UGRO Capital has increased to ₹890 crore. The company also stated that its total development finance and impact capital raised has exceeded ₹1,300 crore.

Where Will UGRO Capital Deploy the Funds?

UGRO Capital said the proceeds from the NCD issue will be used to finance or refinance eligible lending activities, including:

Women-owned and women-led small and medium enterprises.
Youth-owned and youth-led enterprises.
Rural MSMEs.
Eligible green projects aligned with FMO’s sustainability approach.

The funding is part of UGRO Capital’s broader strategy to expand access to formal credit for businesses that may face difficulties obtaining loans through traditional banking channels.

Company Focuses on Diversified Institutional Funding

UGRO Capital is working to build a diversified, long-term institutional funding base and reduce its dependence on the domestic banking system.

The company stated that it has raised more than ₹1,300 crore from development finance institutions and impact-focused investors in India and overseas.

Its funding partners include FMO, IFU, the Asian Development Bank, Triple Jump, BlueOrchard, responsAbility, Calvert Impact Capital, Enabling Qapital, GMO, WaterEquity and MicroVest, among others.

According to the company, several of these institutions have invested repeatedly, reflecting continued engagement with its MSME lending platform.

UGRO Capital’s MSME Lending Business

UGRO Capital operates as a data-driven lending platform focused on addressing the financing needs of Indian MSMEs.

The company’s lending operations include its Emerging Market business and GROx embedded merchant finance platform.

Emerging Market Lending

Through its Emerging Market business, UGRO Capital provides secured loans to small businesses, including enterprises with annual turnover below ₹3 crore.

The company uses its proprietary GRO Score underwriting system, which evaluates borrowers using banking cash flows and other business information.

The average loan size in this segment is approximately ₹18 lakh, while around 80% of the Emerging Market portfolio is located in Tier-3 geographies and beyond.

UGRO Capital has 317 branches across 13 states supporting this business.

GROx Embedded Merchant Finance

GROx provides working capital financing to small merchants operating within payment ecosystems.

Its target customers include:

Kirana stores.
Agri-input dealers.
Pharma distributors.
Other nano-enterprises.

The average loan size in this segment is approximately ₹1 lakh. The company stated that many of these borrowers are accessing formal institutional credit for the first time.

GROx AUM Rises 32% Quarter-on-Quarter

According to UGRO Capital’s press release, the GROx platform reported the following operating figures for Q1 FY27:

Disbursements: ₹1,853 crore.
Assets under management (AUM): ₹3,003 crore.
Quarter-on-quarter AUM growth: 32%.
Active customers: Approximately 3.4 lakh.
Monthly loan originations: More than 60,000.

The company also stated that its Emerging Market and GROx portfolios together accounted for 46% of total AUM as of June 30, 2026, compared with 32% in December 2025. UGRO Capital expects these businesses to represent the majority of its loan book by FY29.

UGRO Capital’s Social Impact Focus

UGRO Capital said its lending activities are focused on improving access to finance for underserved businesses.

The company’s Social Impact Report 2024-25, verified by Dun & Bradstreet India, maps its portfolio to eight United Nations Sustainable Development Goals, including:

Decent Work and Economic Growth.
Gender Equality.
Reduced Inequalities.
Affordable and Clean Energy.
Industry, Innovation and Infrastructure.
Good Health and Well-being.
Clean Water and Sanitation.
Quality Education.

The company reported that 76% of its borrowers had a woman owner or co-owner, while 88% of borrowers reported revenue growth after receiving UGRO financing, based on the company’s social impact reporting.

Management Commentary

Shachindra Nath, Founder, Vice Chairman and Managing Director of UGRO Capital, said that FMO’s third investment reflects continued support from development finance institutions for the company’s MSME lending model.

He added that UGRO Capital aims to build a platform capable of delivering measurable MSME impact while maintaining credit discipline and creating long-term value for shareholders.

Juan Jose Dada Ortiz, Co-Chief Investment Officer at FMO, said the latest financing would support greater access to credit for underserved MSMEs across India.

According to FMO, small and medium-sized businesses play an important role in entrepreneurship, employment generation, and economic development.

What Does the Fundraising Mean for UGRO Capital?

The ₹380 crore fundraising strengthens UGRO Capital’s long-term debt funding base and provides additional resources for its MSME lending operations.

The key developments include:

Increased cumulative commitment from FMO to ₹890 crore.
More than ₹1,300 crore raised from development finance and impact-focused institutions.
Continued focus on lending to women-led, youth-led, and rural MSMEs.
Support for eligible green projects.
Additional long-term funding for the company’s lending platform.

For investors, the development is relevant to UGRO Capital’s funding strategy and its efforts to expand MSME credit access. However, the impact on future profitability, asset quality and shareholder returns will depend on loan growth, borrowing costs, credit performance and execution.

About UGRO Capital

UGRO Capital Limited is an MSME-focused lending company listed on the Indian stock exchanges under the symbol UGROCAP on NSE and 511742 on BSE.

The company operates through its Emerging Market branches and GROx embedded merchant finance platform. It uses data-driven underwriting tools to provide credit to small businesses and aims to address the financing gap faced by Indian MSMEs.