Fintech platform U GRO Capital Ltd, which is focused on micro, small and medium enterprises (MSMEs), on Monday said it has raised Rs 138 crore (around $18.5 million) as its first impact-focused debt capital from Swiss firm responsAbility.
The company plans to use the fresh funds to back MSME-focused companies in India.
U GRO raised the latest investment in the form of two components – USD-denominated external commercial borrowings (ECB) worth Rs 31 crore and INR-denominated non-convertible debentures amounting to Rs 107 crore.
The ECB transaction was raised through a social bond structure from Swedish International Development Agency (SIDA), responsibility and Danske bank to disburse $177.5 million in a debt capital from private investors.
The social bond offers loans to companies in capital-scarce regions that operate in financial inclusion, healthcare and climate finance sectors, among others, in an effort to contribute to the sustainable development goals of the UN 2030.
The deal, which was completed within three months, aims to boost the overall targets of U GRO Capital as the company looks to funding similar transactions over the coming years.
“DFIs (development financial institutions) and impact investors are critical funding partners to help us bridge the MSME credit gap in India and with this transaction, we have been able to affirm impact investors’ confidence in our business model,” said Shachindra Nath, Executive Chairman and Managing Director at U GRO Capital.
U GRO Capital said it is looking to serve one million small businesses, and also claimed to have hit an asset book of 1% of outstanding MSME credit in India.
The company uses an AI-based credit underwriting engine combining bank that helps fintech firms deepen their distribution reach through a plug and play API driven integration with U GRO Capital.
U GRO Capital had raised nearly Rs 2,500 crore in equity and debt capital from private equity investors, family offices, banks and other financial institutions over the last three years.
Meanwhile, responsAbility has invested over $11 billion in emerging markets since 2003, and focuses on climate finance, sustainable food production, and financial inclusion.
On January 27, M&G Plc, an international savings and investments firm, agreed to buy about 90% of responsAbility Investments AG. M&G expects to acquire the remaining 10% in due course.
“India continues to be an important market for funds managed or advised by responsAbility and we are excited to work with a like-minded partner like U GRO Capital to improve access to finance in the country,” said Rudrashis Roy, investment officer of financial institutions debt at responsAbility.
Shachindra Nath, who had quit as Group Chief Executive Officer at Religare Enterprises Ltd in 2016, founded U Gro after acquiring listed NBFC Chokhani Securities and merging another lending firm with it. U Gro counts private equity firms ADV Partners, NewQuest Asia and IndGrowth as its backers.