The country’s largest microfinance firm SKS Microfinance is eyeing a valuation as much as $1.5 billion in its public issue that would make it among the top 25 most value financial services firms in India ahead of names such as Indian Overseas Bank, Bajaj Finserv, Federal Bank, Religare Enterprises and M&M Financial Services.
The firm fixed a price band of its initial public offer at Rs 850-985 per share that would allow it to raise up to Rs 1,654 crore at the upper end of the price band in the issue that opens Wednesday. At the lower end of the issue price band the firm will be valued at $1.3 billion and it wil be able to raise around Rs 1,427 crore.
At the upper end of the price band, Sequoia will be making part exit with returns of over 16x in its three year old investment. It has 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 issue comprises 16.791 million shares including fresh issue of 7.4 million and the rest being offer for sale by Sequoia, SKS Capital and a handful of executives of the institution.
The IPO, the first by a microfinance entity in India, will also show investors appetite for such lending institutions that are quietly doing business in hinterlands of the country. The money raised from fresh issue approximately Rs 630-730 crore, is to be used for meeting the company’s future capital requirements.
Founded by Vikram Akula, SKS Microfinance has a customer base of over 5 million people. Besides Sequoia it uis backed by a number of other financial firms including Catamaran Management Services(backed by Infosys co- founder & chief mentor NR Narayana Murthy), Tejas Ventures, SIDBI and venture capitalist Vinod Khosla.
Citigroup Global Markets, Credit Suisse and Kotak Mahindra are the book-running lead-managers to the issue.