SKS Microfinance Said to Raise Maximum Sought in IPO
SKS Microfinance Said to Raise Maximum Sought in IPO
Chris Ratcliffe/Bloomberg
Vikram K. Akula, founder of SKS Microfinance of India, speaks in Davos, Switzerland. The company, based in Hyderabad, is selling the shares for 985 rupees each, or the top end of a proposed price range.
Vikram K. Akula, founder of SKS Microfinance of India, speaks in Davos, Switzerland. The company, based in Hyderabad, is selling the shares for 985 rupees each, or the top end of a proposed price range. Photographer: Chris Ratcliffe/Bloomberg
SKS Microfinance Ltd., the Indian lender backed by George Soros, will raise the maximum 16.3 billion rupees ($353 million) sought in an initial public offering, according to two people with knowledge of the matter.
The company, based in Hyderabad, is selling the shares for 985 rupees each, or the top end of a proposed price range, the people said, declining to be identified before a public announcement. SKS got bids for 13.7 times the shares offered until yesterday on India’s two primary bourses, according to the National Stock Exchange’s website.
The sale may help SKS, India’s largest microfinance lender, bolster credit to the nation’s poorest in a market where an estimated 120 million households don’t have access to banking and financial services, according to Crisil Ratings. The company last week attracted anchor investors including funds managed by Morgan Stanley, BNP Paribas SA and Fidelity Investments.
“SKS’s success at scaling up with relatively low risk, and the huge growth potential of the sector, made the IPO appealing,” Tejas Doshi, vice president of research at Sushil Finance Consultants Ltd., said by telephone from Mumbai. “The other draw was the high profile of its existing investors.”
Kotak Mahindra Capital Co., Citigroup Inc. and Credit Suisse Group AG managed the IPO, in which 16.8 million shares were offered by SKS and stakeholders including Sequoia Capital for 850 rupees to 985 rupees apiece from July 28. Retail investors will get a 50 rupee discount, the company has said.
Atul Takle, a spokesman for SKS, couldn’t immediately be reached for comment.
Kotak, Citigroup
The offering cements Kotak Mahindra’s No. 1 ranking among banks managing IPOs in India for a second consecutive year, after it advised companies including builders Jaypee Infratech Ltd. and DB Realty Ltd. on raising funds, according to Bloomberg data. Citigroup is ranked highest in managing total equity transactions in India, while Credit Suisse is ranked 16th.
SKS provides loans from $22 to $260 each for women raising cows or opening a village tea stall in a nation where 828 million people live on less than $2 a day. India has an untapped credit demand of 1.2 trillion rupees, according to Crisil Ratings, the Indian unit of Standard & Poor’s.
Microfinance lending in India, the world’s largest market for such loans, may surge about 40 percent annually over the next few years, according to Sanjay Sinha, managing director at New Delhi-based Micro-Credit Ratings, which provides ratings services to potential investors.
Largest Micro-Lender
SKS, which received a non-banking finance company license from the Reserve Bank of India in 2006 and currently has 5.3 million customers, is India’s largest microfinance company by value of loans outstanding, number of borrowers and branches, according to Crisil.
The lender on July 27 sold 3 million shares to anchor investors, which are institutions required to hold the shares for at least 30 days, at 985 rupees apiece, according to an e- mailed statement. Those buyers included Soros’s Quantum (M) Ltd. as well as funds controlled by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Nomura Holdings Inc.
SKS got bids for more than 20 times the 7.1 million shares offered to other institutional investors, with overseas funds bidding for 106.7 million shares, according to the National Stock Exchange. Retail investors bid for 2.8 times the shares available to them, the data showed.
Indian companies have raised more than 104 billion rupees from IPOs this year, according to Bloomberg data, and firms led by Jindal Power Ltd. and Sterlite Energy Ltd. are waiting on the sidelines to raise another 290 billion rupees from first-time sales. The government also aims to generate 400 billion rupees from stakes in companies it controls in the 12 months to March.
Foreign fund inflows to Indian stocks have increased 40 percent this year to $10.5 billion, according to data compiled by Bloomberg. India’s benchmark Sensitive Index climbed for a sixth quarter in the three months ended June 30, the longest rally based on data going back to 1979.
To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net
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