SKS Microfinance to raise Rs 500 crore through rated bonds

As part of a Rs 5,000 crore borrowing plan for the next fiscal, Hyderabad-based SKS Microfinance is planning to raise Rs 500 crore through rated bonds next fiscal. It has also firmed up plans to raise Rs 25 crore through issuance of commercial paper (CP) in the next few days. SKS will be the first non-banking finance company (NBFC) in the micro finance space to use CP for fund raising.

SKS had recently raised Rs 25 crore through the issue of non-convertible debentures (NCD), fully subscribed by Yes Bank. The bond had a tenure of one year and carries a coupon rate of 10.50 per cent annum.

This fiscal, SKS expects to disburse a total of Rs 4,500 crore, with a total portfolio outstanding of Rs 2,500 crore. Next fiscal, it planned to disburse a total of Rs 8,750 crore, with a portfolio outstanding of Rs 5,000 crore, said S Dilli Raj, chief financial officer, SKS Microfinance.

This apart, SKS will raise Rs 500 crore through securitisation deal with financial institutions. Securitisation is the process of pooling and repackaging of cash flow producing financial assets into securities 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.

Mostly banks were the subscribers to such instruments. SKS was mulling to sell such securities to mutual funds as well, said Vikram Akula, founder and chairperson, SKS.

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

Last year, it had raised Rs 366 crore through private equity deals. The total equity capital of the company at present is Rs 660 crore.

Currently SKS is present in 18 states. This year it has plans to expand in Tamil Nadu and in the North East.