Setting naysayers aside, the country’s largest microfinance lender SKS Microfinance’s initial public offer was oversubscribed almost 13 times at the end of the issue. Even as various questions over its backers and top management encashing out by selling shares remains unanswered, the successful floatation gives hope to other such microfinance firms to go public to scale up operations further.

Will SKS success lead to a flurry of MFI floats in the market? "I would think there would be more offering as capital is going to be key factor driving this business. There are few pitches which we have been called for," said a banker involved in the issue on the condition of anonymity.

But the valuation benchmark set by the SKS issue may build up hopes, with other MFIs looking at similar or higher valuations. According to the exchange data, the sale of 16.8 million shares of SKS received bids for 13.7 times the offering.

"Each story will have have to sell itself because everyone will not get the same response as the scale and size of what Dr. Akula has built is not comparable at the moment," cautions this banker.

Surely, the issue was lapped up by institutional investors with QIB portion reserved for them oversubscribed over 19 times even as the issue was open to them for just three days unlike others who had more time to subscribe to the shares. But the issue saw commendable interest from both non-institutional large investors as also retail investors.

While the proportion of shares blocked for non-institutional investors was oversubscribed over 17 times led by corporates although HNIs also participated in large numbers, the retail portion also was oversubscribed almost two times. This indicates much more confidence in the issue compared to various other FPOs and other recent IPOs where retail investors were not convinced enough to test the issue. Moreover, the issue saw good retail interest even as many analyst considered the price a bit too far fetched.

"I don’t think we got any stick from the investor community that this is too expensive for us to come in," said the banker.

Credit Suisse Securities, along with Kotak Mahindra Capital and Citigroup Global Markets, were the book running lead managers to the IPO. Credit Suisse also helped the world’s first MFI Mexico’s Compartamos to a successful IPO.

The microfinance firm had already roped in a bunch of around three dozen anchor investors with Reliance Capital Trustee, BNP Paribas Arbitrage, Quantum (M) and Smallcap World Fund leading the funding.

Given the oversubscription, SKS Microfinance could now be looking at potential valuation of $1.5 billion (based on upper end of the price band). This would place it among the top 25 most valued financial services firms in India ahead of names such as Indian Overseas Bank, Bajaj Finserv, Federal Bank, Religare Enterprises and M&M Financial Services. This would allow it to raise up to Rs 1,654 crore.

Sequoia is making part exit with returns of over 16x in its three year old investment. It had invested through two funds SCI II Llc and SCIGI I with average cost of purchase pegged at Rs 61.18 and Rs 137.53 per share, respectively. SCI II is a part of the group of shareholders who have together offered to sell a part of their holding in the IPO.

The Rs 28 crore backing from Infosys chief mentor N R Narayana Murthy, who invested through Catamaran, also helped the issue sail through. "I guess it validates the whole process but obviously his being there is not the reason why the company or business model is what it is. But his chairing various committees validates the fact that there is belief in this story," said the banker. 

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