SKS looking to raise Rs 500 cr via rated bonds

As a part of its Rs 5,000-crore incremental borrowing plan for the next financial year, Hyderabad-based SKS Microfinance is planning to raise Rs 500 crore through rated bonds. It has also firmed up plans to raise Rs 25 crore through issuance of commercial papers (CPs) this year.

SKS will be the first non-banking finance company (NBFC) in the microfinance space to use CPs for fund-raising. It had recently raised Rs 25 crore through the issue of non-convertible debentures (NCDs), which was fully subscribed by Yes Bank. The bond had a tenure of one year and carried a coupon rate of 10.50 per cent. Additionally, SKS is planning to raise another Rs 25 crore through rated bonds this fiscal year.

During the current financial year ending March 31, SKS expects to disburse a total of Rs 4,500 crore, with a total outstanding portfolio of about Rs 2,500 crore. Next fiscal, it plans to disburse a total of Rs 8,750 crore, with an outstanding portfolio of Rs 5,000 crore, said S Dilli Raj, chief financial officer, SKS Microfinance. This year, the total incremental borrowing of SKS would be close to Rs 3,200 crore, with major contribution from banks, he added.

Also, SKS is planning to raise Rs 500 crore through securitisation deals with financial institutions next fiscal. Securitisation is the process of pooling and repackaging of financial assets, or future cash flows, into securities which are then sold to investors.

Generally, a pool of micro-finance assets are sold to a bank at a discounted rate. These assets then become a part of the bank’s books. Banks form most of the subscribers of such instruments. In fact, SKS is considering the sale of such securities to mutual funds as well, said Vikram Akula, founder and chairperson, SKS.

SKS Microfinance and ICICI Bank had recently completed a securitisation deal worth Rs 200 crore.

It had also raised Rs 366 crore through private equity deals a few months back. Currently, SKS is present in 18 states.

This year, it has plans to expand into Tamil Nadu and in the north-east states too.