SKS Microfinance, India's largest microfinance institution, seems to be in ever need of capital to fuel its growth. The Hyderabad-based non-banking finance company has received a strategic investment of Rs 50 crore from insurance firm Bajaj Allianz Life Insurance.
SKS has so far raised $123.5 million in equity alone from Sequoia Capital and Sandstone Capital, among others. SKS also recently became the first MFI to raise Rs 75 crore via non convertible debentures (NCD) and list the same in Bombay Stock Exchange. Previously it had raised Rs 25 crore via NCDs which was subscribed by Yes Bank. It had also completed a securitisation deal worth Rs 100 crore.
Bajaj Allianz's equity deal with SKS seems to be the culmination of a strategic partnership the firms had with each other. SKS and Bajaj Allianz partnered in April 2008 to launch a micro-insurance product for the rural poor.
The latest round will help SKS Microfinance further improve its capital adequacy ratio requirements. In recent months, SKS has introduced a range of mainstream financial instruments into microfinance.
“An investment in SKS by a mainstream investor such as Bajaj Allianz is a vote of confidence in the company and in microfinance. Investment from a leading private insurer gives SKS greater stability and credibility, as well as a stronger capital base to extend our reach to serve more poor customers,” SKS founder and chairman Vikram Akula stated in a press release on Thursday.
SKS Microfinance currently has a membership base of 4.5 million households and has cumulatively disbursed loans worth over Rs 8,000 crore. It has staff strength of 14,249 across 1,439 branches in 19 Indian states.