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Capital Market | 4 September 2013

Sequoia Capital Offloads Partial Stake In SKS Microfinance

by Tilak Devadiga
Sequoia Capital Offloads Partial Stake In SKS Microfinance
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PE firm Sequoia Capital through its Sequoia Capital India Growth Investment has sold 15 lac shares of SKS Microfinance at R132 each on BSE. The company trimmed its stake from 3.8% to 1.39% for a total consideration of R19.8 Cr.

Sequoia had entered the microfinance lender in 2007 through its equity investment of $11.5 Mn as a lead investor with others like Unitus Equity Fund, Vinod Khosla, Ravi Reddy, Odyssey Capital, and SIDBI.

Through similar transactions, SKS Benefit Mutual Trust bought 1025490 shares of the micro finance lender for a total of R13.41 Cr paying R130.79 ascrip hiking its stake to 12.6%, thus becoming the single largest shareholder. SKS Trusts comprises five mutual benefit trusts whose beneficiaries are self-help groups of borrowers of SKS Microfinance. The sole trustee of SKS Trusts is SKS Trust Advisors.

Similarly Vikram Akula, founder of SKS Microfinance, who had resigned from the SKS Microfinance's board in the wake of huge losses suffered by the Hyderabad-based firm in 2011 sold his entire residual holding of 9,06,724 shares(0.84%) for R11.96 Cr.

CLSA Mauritius (8.77%), Sandstone investment Partners (7.71%), Amundi Funds (2.54%), DSP Blackrock(1.17%) are among the other shareholders as on June 2013.

SKS has been actively raising funds last year;

It had completed R54.48 Cr securitization transaction; allotted 44.5 lakh shares to Kumaon Investment Holdings in a preferential allotment; raised R100Cr loan from Small Industries Development Bank of India.

SKS had been facing problems after Andhra Pradesh came up with regulations in October 2010 restricting lending and recovery, however the company recorded net profit of R 5 Cr, its third consecutive quarterly profit, as against the loss of R39 Cr in the same quarter a year ago.

This year, Royal Bank of Scotland had sold its 4.62% stake in SKS Microfinance for about R63.50 Cr through the open market transactions.

Other transactions in this space;

  • Janalakshmi Financial Services had raised R325 Cr as a part of Series D round of funding from PE investors.
  • Invest India Micro Pension Services Private Limited has raised private equity funding from German development bank Kreditanstalt fur Wiederaufbau for 30% stake.
  • IDBI Bank had invested in Ananya Finance For Inclusive Growth Pvt. Ltd through OCCPS.
  • IFC is proposing to invest in Ujjivan Financial Services and Equitas Micro Finance through ECB route to manifest IFC’s support for an existing portfolio investee.

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