Indian IPO

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Saturday, March 27, 2010

SKS first microfinancier to float IPO

SKS Microfinance Ltd, the country’s largest microfinance company, plans to raise Rs 1,100 crore ($250 million) through an initial public offering (IPO).

As per its draft offer document filed with the Securities and Exchange Board of India, the issue comprises 1.67 crore shares, accounting for 21.6% of the company’s fully diluted post-issue capital. This includes a fresh issue of 0.74 crore shares and an offer for sale of 0.93 crore shares by certain selling shareholders.

Mauritius Unitus Corporation and Sequoia Capital India are among the shareholders looking to sell shares through the issue.

According to the offer document, Sequoia, which has been an early investor in companies such as Google and Yahoo, started buying stake in SKS in March, 2007 at Rs 49.77 a share. It plans to sell about 4 million shares, or less than a third of its stake, through the IPO.

At least 60% of the IPO shares will be available for institutional investors.

Net proceeds from the fresh issue would be used to augment the future capital requirements of the company arising out of growth in its business.

The book running lead managers to the issue are Kotak Mahindra Capital, Citigroup Global Markets India and Credit Suisse Securities (India).

The company is to be listed on the National Stock Exchange and the Bombay Stock Exchange.

The company, founded by former McKinsey & Co management consultant Vikram Akula, lends to the rural poor, especially women, on a for-profit basis.

It received a non-banking finance company licence from the Reserve Bank of India in 2006 and currently has 5.3 million customers. Going by an October, 2009 report by Crisil, it is India’s largest microfinance company by value of loans outstanding, the number of borrowers and number of branches. It had 24 regional offices and 1,627 branches spread across 19 states as of September 30.

The market for the issue is expected to be strong going by the response to recent fundraising attempts by the sector.

Companies such as Grama Vidyalaya Microfinance Ltd, ESAF Microfinance Ltd and Navachetna Microfin Services have used various debt and equity options including securitisation and non-convertible debentures, drawing participation from asset managers such as Bajaj Allianz Life Insurance, ICICI Prudential Asset Management, Canara Robeco Mutual Fund and Religare Asset Management.

“There is a large population out there, which is not covered by the formal banking sector, which should be really helped by microfinance institutions. I believe there should be a great deal of enthusiasm for the sector, though the exact fundamentals would have to be examined before investment,” said Sanjeev Patni, president and head of institutional equities at Prabhudas Lilladher.

1 Comments:

At 12:38 PM, Anonymous inder said...

great work... thx.

 

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