SKS Microfinance may launch IPO in 2010

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SKS Microfinance, the largest microfinance institution in the country and the fifth largest globally in terms of client base, is looking at more than doubling its total loan disbursals in 2009-10 to Rs 8,770 crore, from over Rs 4,000 crore disbursed so far in the current fiscal, according to Mr Vikram Akula, Founder and Chairman of the company.

The Hyderabad-based institution has set itself a target of disbursing Rs 4,500 crore in loans to the rural poor in 2008-09, growing at over 270 per cent compared with the previous fiscal. The outstanding portfolio would stand at Rs 5,100 crore by March 2010, compared with Rs 2,400 crore currently, he said.

The growth would be attained by expanding its client base and venturing into new markets, he said.

It plans to launch operations in Tamil Nadu this year by opening 54 branches, Mr Dilli Raj, Chief Financial Officer of the company, told Business Line.

The southern region of the country is the largest contributor to its business, with Andhra Pradesh and Karnataka accounting for 30 per cent and 17 per cent disbursals respectively. The client base, by March 2010, would increase to 6.5 million from 3.9 million clients across 60,000 villages currently, he said. Currently, it provides loans for income generating activities to rural women in 19 states and also extends third-party micro-insurance products of LIC, Bajaj Allianz, SBI Life and ICICI Lombard.

Public issue

The microfinance institution plans to open nearly 400 new branches in 2009-10, raising the total number of branches to 1,750, Mr Raj said.

It may also look at launching an IPO, Mr Akula said. "We may go for a public issue in the future in order to support our capital raising plans," he said.

The IPO may be launched in 2010, a senior official at the company said. The company has an equity base of Rs 660 crore. It raised Rs 366 crore in October through the private equity route.

In 2009-10, the company is also looking to raise Rs 5,000 crore through bank loans, cash credits, placements with mutual funds and other debt instruments, Mr Raj said. Nearly Rs 500 crore of it would be raised through rated instruments like bonds, pool securitisation and commercial papers, he added. The incremental debt in the current fiscal stood at Rs 3,200 crore.

The capital adequacy ratio of the NBFC stands at 30 per cent, reports The Hindu Business Line.