Sequoia Capital, a US-based venture capital firm, has sold its 1.75-percent stake in SKS Microfinance, an Indian for-profit microfinance institution, to WestBridge Capital, an investment group with offices in India, Mauritius, and the United States. WestBridge purchased Sequoia’s shares for INR 155 (USD 2.47) each, allowing Sequoia to exit its investment in SKS with gross proceeds of INR 29.2 crore (USD 4.7 million) [1]. Sequoia purchased the stake in SKS five years ago at INR 138 a share. With this transaction WestBridge increases its holdings in SKS to 10.2-percent.
As of March 2013, SKS reported to US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 434 million, approximately 4.3 million borrowers, return on assets (ROA) of -15.8 percent and return on equity (ROE) of -73.4 percent. SKS shares trade on the Bombay Stock Exchange and India’s National Stock Exchange.
By Meraj Husain, Research Associate
About Sequoia Capital: Sequoia Capital is a venture capital firm that provides funding for seed stage, early stage and growth stage companies. The firm is headquartered in Menlo Park, California, USA, and has offices in China, India and Israel. Sequoia has provided funding of USD 100,000 to USD 100 million to each of approximately 700 companies and manages USD 2.4 billion in assets [2].
About WestBridge Capital: WestBridge Capital is an investment group with offices in India, Mauritius, and the United States. Westbridge manages approximately USD 800 million in assets invested in both public and private companies [3].
About SKS Microfinance: SKS Microfinance is a for-profit microfinance institution (MFI) that was launched in 1998 in India. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. It has since diversified into offering gold loans and microinsurance services but does not accept deposits. As of March 2013, SKS reported to US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 434 million, approximately 4.3 million borrowers, return on assets (ROA) of -15.8 percent and return on equity (ROE) of -73.4 percent. SKS shares trade on the Bombay Stock Exchange and India’s National Stock Exchange.
Sources and Additional Resources
[1] VCCircle Network: “Sequoia Capital to exit SKS Microfinance as WestBridge set to hike stake to over 10%,” http://www.vccircle.com/news/micro-finance/2013/11/13/sequoia-capital-exit-sks-microfinance-westbridge-set-hike-stake-over
[2] CrunchBase: “Sequoia Capital,” http://www.crunchbase.com/financial-organization/sequoia-capital
[3] WestBridge Capital: “About WestBridge,” http://www.westbridgecap.com/about-westbridge.html
MicroCapital Story, March 3, 2013, “MICROCAPITAL BRIEF: SKS Microfinance Completes $11.6m Securitization, Its Eighth in a Year,” https://www.microcapital.org/microcapital-brief-sks-microfinance-completes-11-6m-securitization-its-eighth-in-a-year/
MicroCapital Story, October 22, 2013, “MICROCAPITAL BRIEF: SKS Microfinance of India Completes $50m Securitization,” https://www.microcapital.org/microcapital-brief-sks-microfinance-of-india-completes-50m-securitization/
MicroCapital Universe Profile: SKS Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
MicroCapital Universe Profile: Sequoia Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sequoia+Capital
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