Public-listed micro-lender SKS Microfinance Ltd is looking to raise growth capital of up to Rs 400 crore ($64 million) by issuing fresh shares to qualified institutional investors, subject to maximum equity dilution of 20 per cent, to fund its expansion plans, as per a stock market disclosure.
The firm said it plans to raise the capital in the coming financial year starting April 1.
SKS currently has a market cap of around Rs 1,950 crore and back-of-the-envelope calculations show this means it is looking to issue new shares at around Rs 185 or more. SKS is currently trading around Rs 180 a share.
SKS, which had been active in the loan securitisation market, had last raised fresh capital in 2012 when it scooped Rs 230 crore through a QIP and separately raised Rs 33 crore from WestBridge Capital through a preferential allotment.
The firm plan to use the money to boost capital base besides funding other growth opportunities as part of its 3.0 transformation and expansion strategy across areas like micro-insurance, mobile loans besides core micro-credit (MFI) business.
In line with the move, the firm has overhauled its top management by elevating the current CFO, S Dilli Raj, as the president of the company. His position will be taken over by Ashish Damani, who is presently executive vice president for finance.
MR Rao will, however, remain the company’s managing director and CEO.
The company has also redesignated KV Rao, presently senior executive vice president of operations, as the new COO; JS Sai, presently executive vice president of public affairs, as head of marketing and communications; and V Srinivas Reddy, presently senior executive vice president of human resources, as chief people officer.
In addition, the firm has made PH Ravi Kumar the non-executive chairman. He was already serving at the position, but was in an interim role.
The company has also given portfolio guidance of Rs 4,000 crore and a profit guidance of Rs 125 crore for the year ending March 31, 2015.
For the first nine months of the current year the micro-lender had clocked net profit of Rs 42.7 crore which means it is looking at a sharp uptick in profitability next financial year. The firm had recently said it could have a positive surprise on its previous profit guidance of Rs 55-60 crore for FY14.
Also, the micro-lender expects that its non-MFI business will be just 10 per cent of the assets, but it could contribute 15 per cent of the revenue and 25 per cent of the profit in the medium term.
(Edited by Joby Puthuparampil Johnson)