In the next two quarters, UGRO Capital plans to increase asset under management by adding Rs 2,000 crore in each quarter, Shachindra Nath, vice chairman and managing director, UGRO Capital, told Financial Express. As on September 30, the total assets under management(AUM) of UGRO Capital has crossed the mark of Rs 10,000. The company is now focused on expanding the physical footprint to provide loans to micro enterprises. “We will at least maintain this run rate and may be little more,” he added.
Disbursements towards micro enterprises have doubled to Rs 456 crore on a sequential basis. Overall, the contribution of loans to micro enterprises to AUM has increased to 11% from 8% a year ago.
By the end of the financial year, the company plans to increase branches, catering loans to micro enterprises to 250 from currnt figure of 100. And by the next year, it plans to open 400 branches.
Despite recording, Rs 1,971 crore, highest disbursements this quarter, the approval rate remains on lower side, showing that the company tends to remain prudent when it comes to profiling the customer, risk management, and assessing credit costs, Nath told.
Being a listed startup, our primary job is to make money for our shareholders. Therefore, in coming six quarters, we plan to enhance the return on investment(ROI) to 4% from current 2% and return on equity (ROE) to 16-17% from 8%, he added.
In the quarter ended September, the co-lending business have surged to Rs 615 crore from Rs 324 crore a year ago. Looking ahead, the company would continue to focus on expanding its co-lending book. The co-lending book would be a 50-50 mix of on-balance sheet co-lending and off-balance sheet co-lending( partnership with smaller non-banking financial companies and fintechs).
UGRO Capital has been enabled to established co-lending partnership with leading state-owned banks. With aim of diversifying, it is now exploring co-lending arrangement with private banks. “Our idea is to have base of around 10 partners and keep our asset engine diversified,” he told. Talks with banks and fintechs are going on and as the asset engine capacity increases, co-lending business will expand further, he added.
Currently, the company is in partnership with nine banks and seven non-banking financial companies.
Being a lender to medium, small, and micro enterprises (MSME), the company only partners with companies which are in the MSME segment.
As far as capital raising is concerned, the company has raised funds through various multilateral development banks. In coming months, the company is planning to raise funds via multiple private placements of non-convertible debentures.
Around 35-40% would continue to come from banks, 20% from development financial institutions, and rest would come from public issuances of bonds, Nath told.
Presently, the company has raised dollar 40 million funding deal with United States International Development Finance Corporation (DFC), and raised rupees 200 crore through public non-convertible debentures.
In the initial phase of the business, the focus will be primarily on secured loans. Once, the company achieves sufficiency in its absorption capacity through retained profit, we would like to move to unsecured loans as well, Nath told.
UGRO Capital, on October 22, reported a 22% rise in its net profit to Rs 36 crore on year-on-year basis. The total income rose 21% to Rs 200 crore on yearly basis.