U GRO Capital raises Rs 240 crore from Danish govt’s fund IFU for green finance to MSMEs
Credit and finance for MSMEs: The investment in UGRO is in line with the green strategic partnership between India and Denmark that was signed by Prime Minister Narendra Modi and Denmark’s Prime Minister Mette Frederiksen two years ago.
U GRO Capital raises Rs 240 crore from Danish govt’s fund IFU for green finance to MSMEs:
Investment Fund for Developing Countries (IFU), a Danish development finance institution, has announced an investment of DKK 200 million (approximately Rs 240 crore) in U GRO Capital, a lending platform for small businesses. The investment has been made on behalf of the Danish SDG Investment Fund, which is supported by major Danish pension funds and private investors. This infusion of funds will enable U GRO Capital to finance businesses that are seeking to transition towards greener and more sustainable operations.
The investment by IFU and the Danish SDG Investment Fund reflects a growing global focus on sustainability and the recognition of the crucial role that small and medium-sized enterprises (SMEs) play in driving sustainable development. U GRO Capital’s lending platform provides much-needed financial support to SMEs in India, empowering them to adopt sustainable practices and contribute to environmental and social goals.
As part of the investment agreement, IFU and U GRO Capital have committed to developing and implementing a climate finance strategy framework. This framework will guide the deployment of funds towards climate-related initiatives and support the green transition of businesses. Additionally, the collaboration aims to create climate-related loan products that will further facilitate sustainable practices among SMEs.
The integration of climate finance and sustainability into U GRO Capital’s lending operations will have a significant impact on the greening of small businesses in India. By providing access to affordable financing, U GRO Capital can assist SMEs in adopting cleaner technologies, improving energy efficiency, reducing carbon emissions, and implementing sustainable business practices. This will not only contribute to mitigating the environmental impact of these businesses but also enhance their competitiveness and long-term viability.
The partnership between IFU, the Danish SDG Investment Fund, and U GRO Capital showcases the importance of international collaboration and private sector participation in driving sustainable development. The Danish SDG Investment Fund’s commitment to supporting sustainable investments aligns with the United Nations’ Sustainable Development Goals (SDGs) and demonstrates Denmark’s dedication to promoting environmental sustainability and inclusive growth in developing and emerging markets.
Overall, this investment by IFU and the Danish SDG Investment Fund in U GRO Capital represents a significant step towards fostering sustainability among MSMEs in India. By providing financial resources, expertise, and a climate-focused approach, this collaboration has the potential to catalyze the transformation of small businesses, enabling them to contribute positively to the green economy and sustainable development.
U GRO Capital, a lending platform for small businesses in India, has received a Rs 240 crore equity funding from the Investment Fund for Developing Countries (IFU). This funding has already been disbursed to U GRO Capital, as the company focuses on green financing and sustainability lending. The investment from IFU has provided U GRO Capital with additional capital to support its business growth and expand its lending activities. Shachindra Nath, Vice Chairman and Managing Director of U GRO Capital, mentioned that the company disburses loans amounting to around Rs 500-600 crore per month.
As of the end of FY23, U GRO Capital’s loan book stood at nearly Rs 6,300 crore, compared to Rs 5,095 crore during Q3 of the same fiscal year. The company had disbursed loans amounting to Rs 1,874 crore, and its profit after tax (PAT) stood at Rs 13.1 crore as of Q3. Net non-performing assets (NPAs) accounted for 1.1 percent of the company’s assets under management (AUM).
Shachindra Nath further stated that this is the second equity capital raise for U GRO Capital since its inception. The company aims to gain a 1 percent market share and serve one million small businesses. U GRO Capital’s mission is to positively impact the lives of small businesses, and partnering with a global development financial institution like IFU has accelerated their progress towards achieving this mission.
The equity funding from IFU reinforces U GRO Capital’s commitment to sustainable financing and aligns with its focus on supporting small businesses in their transition towards greener and more sustainable practices. With the support of IFU, U GRO Capital can further scale its operations and provide financial assistance to a larger number of small businesses, contributing to both their growth and the overall development of a sustainable economy.
The investment made by the Investment Fund for Developing Countries (IFU) in U GRO Capital is aligned with the green strategic partnership between India and Denmark, which was signed by Prime Minister Narendra Modi and Denmark’s Prime Minister Mette Frederiksen two years ago. This partnership aims to foster collaboration and investments in climate-related and green projects in India. IFU has received additional funds to support such initiatives and invest in projects that contribute to sustainable development in India.
IFU has a strong focus on investing in renewable energy, green infrastructure, financial services, healthcare, and sustainable food sectors in India. The organization has already invested in more than 100 companies in India, covering various sectors. With its current investments encompassing all these sectors, IFU demonstrates its commitment to promoting sustainability and supporting projects that have a positive environmental and social impact.
Deepa Hingorani, Senior Vice President of IFU, emphasized that India will continue to be a significant investment destination for IFU in the coming years. This statement further underscores the organization’s long-term commitment to supporting sustainable investments in India and contributing to the country’s transition towards a greener and more sustainable future.
The partnership between India and Denmark, coupled with IFU’s investment focus, reflects the growing importance of sustainability and green initiatives in the global investment landscape. By investing in climate-related and green projects, IFU not only supports the development of a sustainable economy but also helps address environmental challenges and promote inclusive growth in India.
