SKS Microfin to File for IPO

SKS, a Hyderabad based company is the first microfinance company that plans to raise about Rs.1,125 crore through the initial public offering (IPO). According to its share sale document, SKS, India’s largest microfinance company (MFI) plans to sell 1.68 crore shares. It is also said that Citigroup, Credit Suisse Group and Kotak Mahindra Capital Company are managing the sale of its shares.

SKS provides loans from Rs.1,000 to Rs.11,000 each for rural poor especially women rearing cows or opening a village tea stall etc. on a for-profit basis. According to recent Crisil ratings, about 12 crore households don’t have access to banking and financial services in India. This leads to an unmeasured credit demand of Rs.1.2 trillion in our country.

The company received a non-banking finance company licence from the Reserve Bank of India in 2006. According to Crisil, it has 5.3 million customers and is India’s largest microfinance company by value of loans outstanding, number of branches and the number of borrowers.

Sequoia Capital, one of Google and Yahoo Inc.’s early investors, backs SKS founded by former McKinsey consultant Vikram Akula. It began buying stake in SKS for Rs.49.77 per share since March 2007. According to the filing made to the capital markets regulator, it plans to sell about 40 lakh shares (less than a third of its stake) now.

Recent investors in SKS include Catamaran Management Services, a fund started by the chairman of Infosys. It invested Rs.28.13 crore in SKS, according to Bloomberg. Its other stakeholders include Bajaj Allianz Life Insurance.