MICROCAPITAL STORY: SKS Microfinance Raises $37 Million in Equity Sale

SKS Microfinance of Hyderabad, India, recently raised 147 Crore Rupees, the equivalent of over USD 37 million, through its third round of equity sales in recent months. Investors include Silicon Valley Bank (SVB) of California, Columbia Pacific, Sequoia Capital of California, Vinod Khosala of California, and Odyssey Capital.

This sale was the latest in a series of large asset transfers by SKS. In 2007 alone, the microfinance institution (MFI) received 1,200 crore rupees, the equivalent of over USD 304 million, from a number of financial institutions including Citi, ABN Amro Bank, Barclays, HDFC Bank, Centurion Bank of Punjab and Corporation Bank. The largest of these include a USD 44 million loan sale to Citigroup, a 140 crore Rupee (the equivalent of over USD 35 million) sale to Centurion Bank of Punjab and ABN Amro, and a USD 11.5 million sale to Sequoia Capital.

California-based Silicon Valley Bank (SVB) was established in 1983 as part of the SVB Financial Group and focuses on emerging, growth, and established technology company and the life science, private equity, and premium wine markets. This appears to be SVB’s first major investment in the microfinance arena.

California-based Sequoia Capital is a venture capital firm established by Don Valentine in 1972. It invests in seed, early, and growth stage companies. SKS Microfinance is the only MFI in Sequoia’s portfolio.

Vinod Khosala is an Indian-American venture capitalist. He is a co-founder of Sun-Microsystems and founder of venture capital firm, Khosala-ventures. He has a strong passion for social entrepreneurship and has invested in a wide variety of microfinance organizations, especially throughout India.

SKS Microfinance was established in 1997 in Hyderabad, India by Vikram Akula. As of March, 2007 SKS had over 500,000 borrowers, a loan portfolio of over USD 63 million, a debt-to-equity ratio of 379 percent, and a return on assets of 1.75 percent. In 2003 the MFI received a rating of “Alpha minus” from Micro-Credit Ratings & Guarantees India Ltd. (M-CRIL). In addition to microloans, SKS also provides life and health insurance by means of a pilot program. As reported by MicroCapital earlier this month, SKS recently expanded operations into the Indian State of Kerala.

By Jacob Keller

Additional Resources:

SKS Microfinance: Home

Bloomberg Currency Converter: Home

Symbiotics.net: Home, sound investment opportunities

MIX Market: Home, 500,000 borrowers, USD 63 million, 379 percent, 1.75 percent

MicroCapital: Home, reported

Silicon Valley Bank: Home

Columbia Pacific: Home

Sequoia Capital: Home

Vinod Khosala/Khosala Ventures: Home