SKS Microfinance’s Rs 400 crore QIP issue oversubscribed

HYDERABAD: SKS Microfinance’s Rs 400 crore share sale to institutional investors was oversubscribed more than three times, reflecting increasing confidence in the turnaround of the Indian microfinance sector and SKS, a senior company official said.

The Qualified Institutional Placement ( QIP) helps SKS improve its net worth to Rs 850 crore from Rs 460 crore and satiates its equity hunger for at least three years, president S Dilli Raj said. The company hopes to strengthen its member base to 8.5 million during this period from four million now.

The capital raising is the largest in the Indian microfinance sector since SKS’ initial share offering in August 2010. The main investors in the placement included CLSA Mauritius, IDFC Mutual Fund, Birla MF, ICICI Prudential MF, Fidelity group and Amansa Capital.

“The Indian microfinance sector’s fundamentals look much stronger now thanks to lesser competition, stable regulatory framework, and strengthened institutional infrastructure,” Raj told ET. “We have put the Andhra Pradesh crisis behind and reported full year profit for FY14 to emerge stronger. As a result, the investor hypothesis was very strong and also the timing of stable new government at the centre helped witness such response.”