Hyderabad-based Share Microfin Ltd, the second largest microfinance institution (MFI) in India, is planning to go for a public offering in next two years. “In less than two years, we can for an IPO,” said Dr Udaia Kumar, Founder and Managing Director, of Share Microfin Ltd in an interview to VCCircle.
The company is also raising a private equity round of $50 million (Rs 250 cr), which it plans to complete in a month's time. Share is raising funds from its existing investors and International Finance Corp (IFC), the private equity arm of the World Bank, and others.
Share is also charting out an aggressive expansion strategy. The MFI plans to have 13 million clients with cumulative loan distribution of Rs 68,000 crore by 2014, said Kumar. Share Microfin presently has 2 million clients with cumulatively distributed Rs 5,300 crore in loans.
The firm's funding requirements will also be huge to support these expansion plans. Kumar estimates that his firm will need an additional equity investment of Rs 450 crore to reach its target, and Rs 30,000 crore as debt funding.
In 2007, Share had diluted more than 51% stake to Legatum Ventures for $25 million. It also raised $2 million from Aavishkar-Goodwell then.
Share has also started selling products like insurance, for which it has tied up with Life Insurance Corporation (LIC) and Bajaj Allianz. It also offers personal loans and is exploring products like mutual funds and housing finance.
Besides Share, another leading MFI planning an IPO is SKS Microfinance, India’s largest MFI, is planning a listing in next 18 months. SKS, which raised a $75 million round from hedge fund
Sandstone Capital in November last year, announced yesterday that it has raised another $10 million from Bajaj Allianz. The insurance firm has picked up a strategic stake as it has tied with SKS to sell its insurance product. SKS has also been raising capital through non-convertible debentures, and it recently listed Rs 75 crore worth debentures in Bombay Stock Exchange. SKS has a membership base of 4.5 million households across the country.