Vikram Akula, founder and chairperson of SKS Microfinance, an Indian microfinance institution (MFI), recently provided thoughts about the microlending industry in India pending SKS Microfinance’s upcoming initial public offering (IPO) amid criticism regarding SKS Microfinance’s interest rates and the debate over whether MFIs should operate on a nonprofit or for-profit basis. Filing of the SKS Microfinance IPO, which is scheduled for July 28, was initially reported by MicroCapital on March 29, 2010.
According to a recent article from the Reuters news service, Mr Akula explains that 28 percent annual interest rate that SKS Microfinance charges is the best available for poor borrowers without collateral, considering the transaction costs of microlending. Additionally, Mr Akula supports obtaining equity in the public market by arguing that as the need for microfinance capital in India is too large to be funded solely by social investors.
By Jennifer Shevock, Research Associate
About SKS Microfinance:
SKS Microfinance is an Indian microlender and delivers microfinance products through a group-lending model to impoverished women in India. It is a for-profit non-banking finance company which converted to a public limited company in May 2009. Equity investors include Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. Its total assets as of March 31, 2009, were USD 596 million with 3.5 million active borrowers, and it reported return on assets of 3.68 percent and return on equity of 18.72 percent.
Sources and Additional Resources:
“Akula shines light on India microlending in SKS IPO” July 1, 2010. http://in.reuters.com/article/idINIndia-49800220100701
“SKS to Sell Shares July 28-July 30, Document Shows”
July 12, 2010. http://www.businessweek.com/news/2010-07-12/sks-to-sell-shares-july-28-july-30-document-shows.html
“IPO Pits Profit vs. Altruism” July 9, 2010. http://online.wsj.com/article/SB10001424052748703609004575355460120599280.html
MICROCAPITAL BRIEF: “Vikram Akula, Founder of Indian Microfinance Institution SKS Microfinance, Speaks About Microlending Business Prior to Pending Initial Public Offering (IPO)” July 13, 2010. https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-sks-microfinance-receives-initial-public-offering-ipo-approval-from-securities-and-exchange-board-of-india/
MICROCAPITAL BRIEF: “Microloan Default Risk Rises in India as SKS Microfinance Plans Initial Public Offering (IPO)” June 23, 2010. https://www.microcapital.org/microcapital-brief-microloan-default-risk-rises-in-india-as-sks-microfinance-plans-initial-public-offering-ipo/
MICROCAPITAL BRIEF: “India’s SKS Microfinance IPO Could Trigger Trend in Microlending” June 16, 2010. https://www.microcapital.org/microcapital-brief-indias-sks-microfinance-ipo-could-trigger-trend-in-microlending/
MICROCAPITAL BRIEF: “Initial Public Offering (IPO) of India-based Microfinance Institution (MFI) SKS Microfinance Raises Questions about Ethics within the Industry” April 13, 2010. https://www.microcapital.org/microcapital-brief-initial-public-offering-ipo-of-india-based-microfinance-institution-mfi-sks-microfinance-raises-questions-about-ethics-within-the-industry/
MICROCAPITAL BRIEF: “SKS Microfinance Limited, Microfinance Institution (MFI) in India, Files to Raise $250m in Initial Public Offering (IPO)” March 29, 2010. https://www.microcapital.org/microcapital-brief-sks-microfinance-limited-microfinance-institution-mfi-in-india-files-to-raise-250m-in-initial-public-offering-ipo/
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/#more-4531
MICROCAPITAL STORY: “SKS Microfinance Plans for India’s First Microfinance Institution’s (MFI) Initial Public Offering (IPO), Managed by Citigroup, Credit Suisse and Kotak Mahindra Capital”
October 12, 2009. https://www.microcapital.org/microcapitalorg-story-sks-microfinance-plans-for-india%E2%80%99s-first-microfinance-institution%E2%80%99s-mfi-initial-public-offering-ipo-managed-by-citigroup-credit-suisse-and-kotak-mahindra/#more-3815
MICROCAPITAL STORY: https://www.microcapital.org/microcapital-story-sks-microfinance-raises-754m-in-equity-capital-in-transaction-led-by-sandstone-capital/
MicroCapital Universe: SKS Microfinance: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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