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Stock Analysis, IPO, Mutual Funds, Bonds & More

SKS Microfinance's qualified institutional placement oversubscribed by 40%

SKS Microfinance has on Tuesday announced that its qualified institutional placement (QIP) was oversubscribed by nearly 40%.

, ET Bureau|
Updated: Jul 17, 2012, 06.16 PM IST
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HYDERABAD: SKS Microfinance, India's second largest microfinance firm in terms of loans given, has on Tuesday announced that its qualified institutional placement (QIP) was oversubscribed by nearly 40%.

As against the plan to raise Rs 165 crore through QIP, the company obtained bids for Rs 230 crore at a floor price of Rs 74.5 a share. The stock on Tuesday suffered a fall of 1.65% at Rs 80.30 on BSE whose benchmark Sensex inched up at 17,105 points. Credit Suisse Securities and Yes Bank have acted as joint global coordinators and book runners to the placement.

The said amount of Rs 230 crore of capital, raised through QIP, which opened on July12 to close on July 17, is the largest in the Indian microfinance sector post SKS' initial public offering in August 2010.

The company has also raised Rs 33.5 crore through preferential allotment, taking the total proceeds to Rs 263.50 crore.

In a statement, the company said the QIP equips it to meet the credit requirements of its four-million rural borrowers who were waiting for some time. "This will help us strengthen our leadership position and improve the sector prospects," said SKS Managing Director M.R. Rao.

The latest capital raising exercise improves the company's networth to Rs 698.5 crore from Rs 435 crore as of March 2012. SKS chief financial officer Dilli Raj said the fresh capital reinforces credit grantors' confidence in the company, apart from enhancing its debt fund-raising ability.

"With the help of fresh funds, we are now targeting to expand our non-Andhra Pradesh loan portfolio to Rs 2,600 crore by March 2013 from around Rs 1,300 crore during FY12. The breakeven point for the non-AP portfolio is Rs 1,600 crore-Rs 1,800 crore, which we expect by end of second quarter of current fiscal," Dilli Raj told ET.

Prior to the controversial AP Act to rein in microfinance companies in October 2010, SKS had a non-AP portfolio of Rs 3,500 crore.

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