Sequoia Capital to exit SKS Microfinance as WestBridge set to hike stake to over 10%

Sequoia Capital is set to exit its investment in SKS Microfinance, selling the last piece of its stake to a fund managed by WestBridge Capital. In a filing, Sequoia said it will sell its 1.75 per cent stake for around Rs 29.2 crore as early as next week.

The filing stated that Sequoia will sell shares for Rs 155 per unit to WestBridge Ventures II LLC. The sale will increase the stake of WestBridge Capital in SKS to 10.17 per cent, just marginally short of that of the five trusts which together make for the largest shareholder group of SKS Microfinance.

Both Sequoia and WestBridge are part of SKS Microfinance's promoter group. SKS scrip was up 1.7 per cent on Wednesday morning and was trading at Rs 144.75 on BSE in a flat Mumbai market.

WestBridge was part of Sequoia when it had first invested in SKS Microfinance and when it spliced out of the Indian unit of the global venture and growth capital investment firm, it divided a part of the SKS investment, housed under different entities.

WestBridge invested during 2007-08 while Sequoia’s holding is traced to investments made during 2008-09 or closer to the IPO.

Sequoia Capital’s cost price stood at Rs 137.53 a share and with the latest deal it would sell its balance stake with a modest 13 per cent absolute return on its five-year old investment. It had been selling its shares in small lots for the last few weeks after divesting some stake around a year ago.

For WestBridge it would be second such transaction. Two months ago it bought the remaining stake of 1.48 per cent held by Unitus for around Rs 22.4 crore. While the last stake sale gave Unitus over 3x returns, the overall investment fetched it 5-6x returns.

These developments come at a time when SKS Microfinance has been in news over its founder Vikram Akula looking to make a comeback at the firm. The firm is also improving its financial performance quarter on quarter.

(Edited by Joby Puthuparampil Johnson)

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