Share Microfin follows SKS route, to go public in 2 years

MF Focus, July 7, 2009: Close on the heels of India’s largest microfinance institution SKS International, Hyderabad-based Share Microfin Ltd (SML), the second largest MFI in the country, is eyeing the IPO route in two years to raise funds for its expansion plans. Sector leader SKS has already made public its plan to go public next year.

SML Managing Director Udaia Kumar has disclosed about the move recently to online private equity tracker VCCircle.com when he said, “In less than two years, we can go for an IPO.” According to him, the company requires an additional equity investment of Rs 450 crore to reach its target.

ON PATH TO GROW
SML, which crossed Rs 1,000 crore target in February, has embarked upon widening its client base to 15 million members and its outstanding portfolio to Rs 16,380 crore by 2012-13 from its present levels of 2 million clients with cumulative distribution of Rs 5,300 crore in loans. In May 2007, SML had sold 51% stake stake to Legatum Ventures for $25 million, besides raising $2 million from India-focused microfinance development company Aavishkar-Goodwell. It has tied up with Life Insurance Corporation (LIC) and Bajaj Allianz to sell insurance products.

SML RATING
In March, as per the Basel II guidelines of the Reserve Bank of India, the company was assigned the grade of LBBB to the Rs 1,185 crore long-term bank limits, indicating moderate credit quality rating by ICRA, one of the rating agencies in India. The agency has given A2 rating to its Rs 15 crore short-term bank limits which is above average credit quality rating against short-term debt instruments.

ICRA has assigned M2 on the scale of M1 to M5 to SML’s microfinance operations, which is the highest grade assigned to any microfinance institution so far, indicating the MFI’s ability to manage its microfinance activities in a highly sustainable way.

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