Exit from SKS not possible now, says Catamaran

Catamaran, the fund floated by Infosys mentor NR Narayana Murthy, said it had invested Rs 28.1 crore in SKS Microfinance in January this year for 937,770 shares after due diligence in Karnataka and Andhra Pradesh. This represents 1.3 per cent ownership of the company today on a fully diluted basis.

“The shares are subject to a concurrent statutory lock-in imposed by the Securities and Exchange Board of India on all pre-IPO investors for 12 months post-IPO. Exit is currently not possible as per law. Catamaran will take that decision solely based upon data and facts at an appropriate time,” a Catamaran release said on Tuesday.

SKS share price has been on the downslide for the past few weeks. The ordinance against MFIs in Andhra Pradesh too has hurt the company’s weekly recoveries.

On October 13, a week after SKS had terminated the services of its former chief executive officer and managing director Suresh Gurumani, new CEO and managing director MR Rao had a discussion with Murthy where they discussed the role of IT in scaling up the operations of SKS. Vikram Akula, SKS founder, too joined the meeting through teleconference.

“Murthy advised Vikram Akula that it is best for the management and the Board to be open, honest and fair in all matters dealing with every stakeholder,” said the release, which Catamaran issued after queries were raised on its investment in SKS Microfinance and the extent of Murthy’s involvement in the company.

Catamaran said apart from this one conversation, Murthy had not had any interaction with either the management or the directors of SKS Microfinance. Its shares in SKS Microfinance would be locked in for a period of 24 months from the date of investment. Murthy would chair an Advisory Council as and when formed by SKS.

The release said competition in the microfinance marketplace will improve efficiency, bring down interest rates and create easy access to loans for the poor. Catamaran invested in SKS with the belief that bringing microfinance into the organised sector allows it to be well-regulated, provide for transparency, debate and improvement on interest rates. Money lending to the poor in rural and urban India was primarily in the hands of moneylenders, who did not report revenues or interest and thus operated with no scrutiny or transparency.

The fund invested in SKS after seeing the latter raising more than Rs 1,900 crore from reputed banks and development financing institutions, adhering to a woman-only, rural-focused, group lending programme with weekly group meetings as pioneered by Grameen Bank in Bangladesh, the release said.

SKS officials did not comment on the contents of the release. SKS share closed at Rs 989.35, 1.57 per cent down from the previous close of Rs 1,005.1. It touched the day’s low of Rs 962.65 on the BSE.