During the quarter that ended on December 31, 2011, Indian commercial microfinance institution SKS Microfinance Limited (SKS) suffered net losses of INR 4.28 billion (USD 85.3 million), 11 percent higher than net losses in the previous quarter. In the quarter ending December 31, 2010, SKS had a net profit of INR 342 million (USD 6.9 million). The largest losses during the most recent quarter came from INR 3.59 billion (USD 71.5 million) in higher provisions and write-offs. However SKS did decrease its personnel expenses relative to the previous quarter. As of January 2012, the company had lost more than 90 percent of its stock market value compared to the peak it reached not long after its initial public offering (IPO) in 2010.
SKS is attempting to raise up to INR 9 billion (USD 179 million) to fund growth outside the state of Andhra Pradesh, where local regulation has steeply reduced microlending since 2010. The Norwegian sovereign wealth fund “Government Pension Fund – Global” acquired a 1.03 percent stake in SKS between September and December 2011. Investments by Government Pension Fund – Global in India have primarily been through purchases in the secondary market.
According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent. In December 2011, the Norwegian Government Pension Fund was valued at NOK 3.4 billion (USD 573 billion).
By Courtney Snelling, Research Associate
About SKS Microfinance Limited: SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers microfinance products through a group-lending model to impoverished women in India as a for-profit, non-banking finance company. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. SKS currently trades on the Bombay Stock Exchange. According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.
About The Norwegian Government Pension Fund Global: The Norwegian Government Pension Fund is comprised of wealth from Norwegian petroleum income. In June 2011, the Fund was said to be the largest pension fund in the world holding 1 percent of global stock. In December 2011, the Fund was valued at NOK 3.4 billion (USD 573 billion).
Sources and Additional Resources:
VC Circle, “India: SKS Q3 Loss At Rs 428 Cr, Norway’s Sovereign Wealth Fund Buys 1% Stake,” January 19, 2012. http://www.vccircle.com/500/news/sks-q3-loss-at-rs-428cr-norway%E2%80%99s-sovereign-wealth-fund-buys-1-stake
MicroCapital Universe Profile: SKS Microfinance Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS…
MicroCapital.org Story, January 23, 2012, “MICROCAPITAL BRIEF: SKS Microfinance to Further Downsize Workforce Cap Return on Assets at 3 percent”, https://www.microcapital.org/microcapital-brief-sks-microfinance-to-furth…
MicroCapital.org Story, December 12, 2011, “MICROCAPITAL BRIEF: Vikram Akula Resigns from Board of India’s SKS Microfinance” https://www.microcapital.org/microcapital-brief-vikram-akula-resigns-from-board-of-india’s-sks-microfinance
MicroCapital.org Story, November 12, 2011, “MICROCAPITAL BRIEF: Shares of India’s SKS Microfinance Fall 10% Following Announcement of $78m Loss During Quarter Ending September 2011” https://www.microcapital.org/microcapital-brief-shares-of-indias-sks-microfinance-fall-10-following-announcement-of-78m-loss-during-quarter-ending-september-2011/#more-15553
MicroCapital.org Story, August 29, 2011, “MICROCAPITAL BRIEF:India’s SKS Microfinance Scaling Up Non-Core Businesses of Financing Grocery Stores, Gold Lending” https://www.microcapital.org/microcapital-brief-india’s-sks-microfinance-scaling-up-non-core-businesses-of-financing-grocery-stores-gold-lending
MicroCapital.org Story, November 8, 2011, “MICROCAPITAL BRIEF:India’s SKS Microfinance to Raise $184m via Share Sale” https://www.microcapital.org/microcapital-brief-india’s-sks-microfinance-to-raise-184m-via-share-sale
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