SKS Micro plans Rs 1,150-cr IPO

SKS Microfinance, the Indian lender backed by Sequoia Capital, plans to raise about $250 million (Rs 1,150 crore).

SKS, the country’s largest microfinance company, plans to sell 16.8 million shares, according to its share-sale document. Citigroup Inc, Credit Suisse Group AG and Kotak Mahindra Capital Co were managing the sale, it said.

The Hyderabad-based company provides loans from Rs 1,012 to Rs 11,960 to women raising cows or planning to open a village tea stall. About 120 million households in India don’t have access to banking and financial services, leading to an untapped credit demand of Rs 1.2 lakh crore, according to Crisil Ratings. Microfinance is a fragmented industry in India, with more than 3,000 companies offering such loans, according to Crisil, the Indian unit of Standard & Poor’s. The top 10 small-scale lenders account for about 74 per cent of small loans.

California-based venture capital firm Sequoia, one of Google Inc and Yahoo! Inc’s early investors, began buying stakes in SKS in March 2007 for Rs 49.77 a share. It now plans to sell about 4 million shares, or less than a third of its stake, according to the filing made to India’s capital- markets regulator on March 25. SKS’s more recent investors include Catamaran Management Services, a fund started by Infosys’ chief mentor NR Narayana Murthy.

Other stakeholders include Bajaj Allianz Life Insurance Co, according to the sale document. At least 60 per cent of SKS shares will be available for institutional investors in the open offer. The company, which received a non-banking finance company licence from RBI in 2006, and currently has 5.3 million customers, is the country’s largest microfinance company by value of loans outstanding, the number of borrowers and number of branches, according to Crisil.