SKS IPO oversubscribed 13.6 times; social sector unimpressed

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 1,653 crore received a subscription of 13.6 times on Monday when it closed for subscription. Sandeep Singh reports.

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

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1,653 crore received a subscription of 13.6 times on Monday when it closed for subscription.

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.

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.