by the MicroCapital Team -

NEWS WIRE: United Kingdom: Planned IPO by SKS Microfinance Brings Up Question of Mission Versus Profit

Source: The Times of London.

Complete article available online.

LONDON, October 22 – Plans for a stock market flotation by India’s largest private microfinance lender have further inflamed the debate over whether the industry should be putting profits or the wellbeing of its impoverished clients first.

SKS Microfinance specialises in lending small sums to very poor borrowers, many of them women, a process that it argues is helping to tackle poverty by funding small businesses.

The group, whose investors include Sequoia, the venture capital firm that famously backed Google, has talked to three investment banks — Citigroup, Credit Suisse and Kotak — about a listing in Mumbai that could raise up to $250 million (£150 million).

The deal, earmarked for the autumn, would be the first of its kind in India, one of the world’s biggest microfinance markets, and would offer investors exposure to a sector that many believe has huge potential. Some estimates have suggested that global demand for microcredit stands at about $250 billion, ten times the amount lent so far….

Remainder of article available online.

by Stefanie Rubin -

MICROCAPITAL.ORG 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

According to an article in the Financial Times, Hyderabad-based SKS Microfinance, India´s largest microfinance institution (MFI), is taking steps toward becoming the first microfinance institution (MFI) to be listed on Indian stock exchanges. The initial public offering (IPO) could come as early as the start of 2010. Investment firms Citigroup, Credit Suisse and Indian-based Kotak Mahindra Capital will manage the USD 200 to 250 million listing [1].

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: Founder And Officer Of India-Based SKS Microfinance Comment On Prospects For Microfinance In China In A Wall Street Journal Report

A recent article entitled ‘Microfinancing China’ in the Wall Street Journal [1] by Mr Vikram Akula and Mr Tarun Khanna discuss the scope for microfinance in China and explores why the concept of microcredit has a ‘notably minimal footprint’ in a mammoth economy such as China. Mr. Akula is founder and chairperson of India-based MFI, SKS Microfinance [2]. Mr. Khanna, the author of the book ‘Billions of Entrepreneurs’ [3] is Jorge Paulo Lemann Professor at Harvard Business School and serves on SKS Microfinance’s board of directors. The view taken by Mr Akula and Mr Khanna is that ‘it will take hard work and reform to grow microfinance in China’ but that millions of poor people in the world’s third largest economy could derive benefits from microloans.

by Diya Chopra -

MICROCAPITAL.ORG STORY: SKS Microfinance and Bajaj Allianz Life Insurance Co. Ltd. Extend Microinsurance Project ‘Swayam Shakti Suraksha’ to Cover Husbands of SKS Members

SKS Microfinance, a microfinance organization based in Andhra Pradesh (India), recently announced its partnership with life insurance company Bajaj Allianz to extend its microinsurance project, ‘Swayam Shakti Suraksha,’ to cover the husbands of SKS members.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: The Economist Continues Debate About A ‘Microfinance Bubble’ And Sets Out Observations By SKS Microfinance, ACCION International And Co-Author Of ‘Portfolios Of The Poor’

In an article in the Economist magazine entitled ‘Froth at the bottom of the pyramid: Is microfinance going the same way as subprime mortgages’ [1], the Economist continues the controversial debate on the ‘microfinance bubble’ that was initiated by a series of provocative articles on the Wall Street Journal and a subsequent blog on the Reuter’s website. These articles have been discussed in previous Microcapital.Org publications [2], [3], [4]. The Economist draws our attention to a view put forward recently by Mr Vikram Akula, founder of India’s SKS Microfinance [5], who expressed disappointment at the recent ‘unbalanced and misleading’ views on microfinance investments and ‘absurd’ sweeping generalisations drawn from anecdotal evidence in one neighbourhood. The Economist reminds us that SKS is about to go public in a ‘doubtless lucrative’ IPO but the views of Mr Akula resonate with the views of other participants in the microfinance sector. Mr Alvaro Rodriguez, former chairman of ACCION International [6] and now chairman of Compartamos Banco [7], finds it hard to see how there can be a ‘bubble’ when, according to estimates, ‘there are currently 100 million microfinance clients out of one billion poor people who want access to financial services’. He added that competition among investors may generate a ‘gold rush’ and lead to ‘frothy lending’ in some instances but stated that competition is a good way to introduce innovation, greater efficiency, better products and pricing into any industry, a development he added that will ultimately benefit the microfinance customers.

by Diya Chopra -

MICROCAPITAL STORY: Nokia and SKS Microfinance to Introduce New Mobile Phone Features for Rural Poor

Nokia Corp, a Finnish telecommunications company and the world’s leading mobile phone supplier, has announced the launch of Nokia Life Tools (NLT) in 12 states across India. As mentioned in a previous MicroCapital story, Nokia has teamed up with Hyderabad-based SKS Microfinance, a non-banking finance company, to deliver these services. NLT is a feature offered on Nokia 2323 and 2330 mobile phones, enabling subscribers to access agriculture-related information, educational resources, and entertainment applications [1]. After the “great success” of a pilot project conducted in Maharashtra testing the rural market for this feature, Nokia vice-president and chief development officer Mary McDowell announced preparations to introduce NLT throughout rural India [2].

by Laura Anderson -

MICROCAPITAL STORY: SKS Microfinance Plans to Raise USD 104 Million in Rated Debt

SKS Microfinance, a Hyderbad-based microfinance institution (MFI), announced it plans to raise Rs. 500 Crore (USD 104 million) in rated debt products in order to satisfy customer loan demands.  According to Dili Raj, Chief Financial Officer, the new debt will include bonds, commercial paper (CP), and securitization of receivables.  Included in the total amount is the recent one-year, 10 percent USD 16 million bond issue reported in a recent MicroCapital story.  Those bonds were listed on the Bombay Stock Exchange and fully subscribed by Standard Chartered Bank.  In fiscal year 2009, SKS raised a total of Rs. 3,700 Crore (USD 767 million) in debt, of which Rs. 150 Crore (USD 31 million) was in bonds, CP, or securitizations.  This fiscal year SKS plans to issue an incremental Rs. 5,000 Crore (USD 1 billion) in debt.

by Laura Anderson -

MICROCAPITAL STORY: SKS Microfinance Raises Rs. 75 Crore (USD 15.8 million) Debt and Lists Bonds on Bombay Stock Exchange

Hyderabad-based microfinance institution SKS Microfinance has issued one-year 10 percent bonds, raising Rs. 75 Crore (USD 15.8 million).  The bonds, which will be listed on the Bombay Stock Exchange (BSE), were placed with Standard Chartered Bank’s Foreign Institutional Investments.  Standard Chartered was the sole book runner and lead arranger for the issue.  The funds will be used by SKS to extend loans to new and existing borrowers. 

by Zoran Stanisljevic -

MICROCAPITAL STORY: SKS Microfinance, Share Microfin, and Equitas Microfinance Collaborate with Yes Bank to Securitize a Series of Micro-loans in India that Cumulatively Amount to USD 38.3 Million.

According to S. Dilli Raj, CFO of SKS Microfinance, the first securitized deal by an Indian MFI has received the highest rating (P1+SO; very strong safety) by CRISIL (A Standard & Poor`s company).  CRISIL assigned a very strong safety review based on an analysis of over 1 million loans that were extended by SKS Microfinance Private Limited.  Also, the series of recent transactions concluded allows YES Bank to purchase 14,850 micro loans that have been extended to unbanked and minority families as identified by the Reserve Bank of India (RBI) as “weaker sections”  The transactions covers roughly 400,000 micro loan borrowers (average loan size USD 178 dollars) and spans across three microfinance institutions (MFIs). 

by Laura Anderson -

MICROCAPITAL STORY: SKS Microfinance, Madura Micro Finance and Grama Vidiyal to Offer Home Loans in India

According to a report in The Times of India, three Indian MFIs will begin offering home loan products to the rural poor.  SKS Microfinance, Madura Micro Finance and Grama Vidiyal all plan to start rolling out home loans and home improvement loans to borrowers with good repayment records.  According to Tara Thiagarajan, Chairman of Madura Micro Finance, the low cost construction model used by the rural poor has prompted the MFIs to offer the loans.  Most people in Indian villages own plots and construct their own homes using indigenous materials.

by Ryan Hogarth -

MICROCAPITAL STORY: Indian SKS Microfinance Issues Bonds and Commercial Notes, and Announces a $963.6m Borrowing Plan to Finance Rapid Growth

Hyderabad-based SKS Microfinance announced that it aims to raise one-tenth of its USD 963.6 million borrowing plan for the next fiscal year through USD 96.4 million worth of securitization deals with financial institutions. The announcement was made shortly after SKS sold USD 4.8 million non-convertible debentures (NCD) with YES Bank and generated another USD 4.8 million through the issuance of commercial paper (CP). Last month, SKS solidified a USD 38.5 million securitization deal with India’s second largest bank, the Industrial Credit and Investment Corporation of India (ICICI). These deals come as SKS strives to finance a loan portfolio that is growing at one of the fastest rates among microfinance institutions (MFIs) in the world.

by Bharathi Ram -

MICROCAPITAL STORY: SKS Microfinance in India Plans to Launch Operations in China

SKS Microfinance, the largest microfinance provider in India in terms of assets, is planning to launch operations in China, in a move to expand its reach beyond India. According to a press release on The Economic Times, SKS reckons this would be the ideal time to enter the Chinese market. The export driven Chinese economy has been impacted by the global meltdown and several vocationally-trained rural employees in China have lost jobs. SKS plans to give credit to these unemployed groups in China and help them start their own ventures. In this regard, the release quoted the chief executive officer and managing director of SKS Microfinance, Mr. Suresh Gurumani as saying that SKS was looking to expand in China primarily because it was a ‘large country with a significant population that was poor’. Mr. Gurumani also stated that the expansion was a move to share SKS’ knowledge in the field of microfinance to benefit ‘a larger section of people’. SKS’ foray into China would make it the first overseas expansion for an Indian microfinance institution (MFI).

by Yanni Hao -

MICROCAPITAL STORY: Indian SKS Microfinance Teams Up with Mobile Phone Vendors Nokia and Bharti Airtel to Provide Service for Rural Customers

Microfinance institutions are teaming up with leading mobile phone makers to offer cheaper handsets customized for rural customers, according to a news report from the Indian Economic Times. The report also noted that Nokia, the world leading mobile phone supplier, is running a pilot project to sell handsets in the Andhra Pradesh state through SKS Microfinance, a non-banking finance company. Likewise, Nokia is about to launch mobile information services revolving around agriculture, education, and entertainment in the rural state of Maharashtra, in addition to partnering with a host of existing content providers to deliver information on seed, fertilizer, and pesticide costs, prevailing market prices for crops, and weather.

by Iyanna Holmes -

MICROCAPITAL STORY: Vikram Akula to step down as CEO of SKS Microfinance

Vikram Akula, founder of SKS Microfinance (SKS ), has announced plans to step down from the role of CEO after 10 years.  Mr. Akula says that this change will allow him to focus on a new initiative – microinsurance.  As MicroCapital reported earlier this year, SKS partnered with Bajaj Allianz Life Insurance Company to offer insurance products toclients.  This announcement comes amid rapid growth in the company. Suresh Gurumani, Director, Barclays Bank, will take over as SKS Microfinance’s CEO.  An official transition date was not given.  

by Iyanna Holmes -

MICROCAPITAL STORY: SKS Microfinance Raises $75.4m in Equity Capital in Transaction Led by Sandstone Capital

SKS Microfinance Pvt. Ltd. has announced the closing of a fourth round of equity financing in which it raised Rs 366 crore, approximately USD 75.4 million.  The transaction was led by Sandstone Capital, a U.S. hedge fund based in Boston, MA.  Also participating in the transaction were existing investors Kismet Capital and SVB India Capital Partners, an affiliate of Silicon Valley Bank.  Edelweiss Capital was the investment banker to the issue.