NEW DELHI: Blue chip microfinance lender SKS Microfinance is likely to induct a new investor next year to raise capital to meet its expansion plans. Its equity base stands at Rs 214 crore. Later this year, its equity will be ramped up by Rs 130 crore. It is planning to double its customer base in two years from its current 2.2 million borrowers. It may even plan a public issue later if required.
“Our investors will infuse Rs 130 crore later this year on a pro-rata basis. We may plan to induct a new investor since we’ll be needing more capital next year and it cannot be generated internally. At this stage, it is not clear how much stake we will offload. We will also not exclude the possibility of a public issue,” Vikram Akula, founder and CEO, SKS Microfinance told ET. SKS has been meeting capital needs through private placement on the back of a large private investor appetite, he said.
Our fast-paced inclusive growth this year has been powered by a third round of equity infusion worth Rs 147 crore in January and Rs 1,267 crore raised against that as debt by partnering with leading banks in India, he added.
SKS decided to focus on a for profit model, making it a scaleable process and use technology to cut transaction costs.
Mohit Bhatnagar, operating partner, Sequoia Capital India one of the shareholders in the lender, said: “We are not too worried about the internal rate of return (IRR) in the short-term. We are excited about the long-term opportunity that SKS will provide.
SKS Microfinance has attracted ‘social’ investors like Unitus, a Seattle-based NGO that helps promote microfinance; Small Industries Development Bank of India, technology entrepreneur Vinod Khosla and private equity players like Sequoia Capital. A trust belonging to the members is also an equity partner in the NBFC business of SKS.
SKS is tying up with Bharti Airtel to offer low-cost mobile banking services to its borrowers. SKS, which is India’s largest and the world’s fastest growing microfinance organisation will soon sign a MoU with Airtel on offering air-time to its borrowers.
At present, 15% of its 2.2 million borrowers in 30,000 villages have mobile phones. In 2007-08 it disbursed unsecured loans worth Rs 1,616 crore among 1.9 million households across 15 Indian states. It is hoping that mobile banking regulations will ease soon.
It is one of the largest microfinance organisations in the country and the world’s fastest growing microfinance organisations with an annual growth rate of 200%. An estimated Rs 20,000 crore have been disbursed by MFIs across the country, but the demand is pegged at Rs 2,45,000 crore.
Nearly 80% of the MFIs cater to a client base of less than 10,000. Although, SKS began as a NGO in the later 90s, it got converted into a NBFC a few years back. It now has over 8,000 employees including loan officers across the country. It has disbursed nearly Rs 2,836 crore in loans with a 99.5% repayment rate. The company operates through 771 branches.
SKS operates in Andhra Pradesh, Karnataka, Maharashtra, Orissa, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala and Delhi. On an average, a SKS member borrows Rs 8,300 under the basic income generating loan product.