A group of four venture capital companies have replaced Mr Vikram Akula, founder of the Indian microfinance institution (MFI) SKS Microfinance, as promoter of the firm. Mr Akula, who holds a 6 percent stake in SKS, did not satisfy regulations mandating that 20 percent of the post-issue capital must be held by promoters named in an initial public offering (IPO) prospectus. SKS is expected to make an initial public offering within the next few weeks.
“This is for the first time in India that venture capital (VC) investors have become the promoters of a company that is going for a public offer,” said Mr Sumir Chadha, Managing Director of Sequoia Capital India, which owns close to 24 percent of SKS with investments worth $30 million.
The other three investors include Sandstone Capital Llc with 12 percent, Kismet Capital Advisors Llc with 17 percent and SKS Trust for the Benefit of Women Entrepreneurs with 15 percent.
By Stefanie Rubin, Research Associate
About SKS Microfinance:
SKS Microfinance was founded in India in 1998. In 2005, it transformed into a for-profit non-banking financial company (NBFC). As of September 2009, SKS had 3.5 million active borrowers and 1,676 branches, compared with 771 branches in March of 2008. According to the MIX Market, the microfinance information clearinghouse, its total assets as of 2008 were USD 596 million, with a return on assets of 3.68 percent and return on equity of 18.72 percent. SKS products include: income generating loans, mid-term loans, individual loans, loan cover insurance and health insurance.
Additional Resources:
Source Article: Livemint.com: “SKS Microfinance Gets Venture Capitalists as Promoters for IPO,” March 10, 2010, http://www.livemint.com/2010/03/10205245/SKS-Microfinance-gets-venture.html
MicroCapital Universe: SKS Microfinance: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
MICROCAPITAL BRIEF: SKS Microfinance, a Microfinance Institution (MFI) Based in India, Expected to File for Initial Public Offering (IPO) in Next Four Weeks, March 9, 2010 https://www.microcapital.org/microcapital-brief-sks-microfinance-a-microfinance-institution-mfi-based-in-india-expected-to-file-for-initial-public-offering-ipo-in-next-four-weeks/
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