Swayam Krishi Sangam, well known as SKS Microfinance — a non-deposit-taking finance company — which is into the business of serving the financing needs of the poor in rural India, emerged as one of the most successful recent stories in the IPO market as its public issue with a size of Rs
From seed to fruition in 7 years
September 2003: SKS Microfinance incorporated
February 2007: Membership of the company crosses 5 lakh in over 250 branches across 11 states.
September 2007: Membership crosses 1 million at 500 branches across 15 states.
August 2009: Membership crosses 5 million
March 2010: Membership of 6.78 million across 19 states through 2,029 branches
The qualified institutional buyers portion of the issue was subscribed 20.4 times while the high net worth individuals and retail portion of the issue had received subscription of 18.3 and 2.8 times till 6 pm.
Founded by Vikram Akula, an American national, SKS Microfinance has approximately 6.8 million members with a total loan outstanding of Rs 2,936 crore. The company earned a total revenue and profit of Rs 958.9 crore and Rs 174.8 crore respectively in the financial year 2009-2010.
While the investors have come in large numbers to the SKS story with an aim to reap profits on their investments into the microfinance business, people working in the social sector are not very comfortable with the business of generating profits for big investors at the cost of poor people's money.
"Since the company is here to serve the poor, why can't it think of bringing down the cost of loans for the poor rather than generating high profits for investors in the capital markets from poor people's mo-ney," said the head of a rural social sector organisation, on condition of anonymity.
Investors and finance professionals associated with the issue are celebrating.
"The quality of the investor speaks about the enthusiasm for the Indian microfinance major," said a source close to the development.