India: SKS Micro Raises Rs100-cr (USD 21.6 ml) Via Non-Convertible Debentures

Feb 2010
Hyderabad, India, February, 23 2010 - SKS Microfinance, the country’s largest microfinance player in terms of assets, has raised Rs 100 crore through an issue of non-convertible debentures and by issuing commercial papers.

The MFI raised Rs 50 crore by issuing non-convertible debentures worth Rs 50 crore to insurance major Bajaj Allianz Life Insurance Company. It raised another Rs 50 crore by issuing commercial papers worth Rs 25 crore in two tranches to Religare Asset Management Company.

“Both these transactions, subscription to non-convertible debentures of SKS by an insurance company and also debt placement with a mutual fund marks the coming of age of microfinance as an asset class and should help SKS to diversify the sources basket,” said Dilli Raj, chief financial officer, SKS Microfinance. The company claims this is the first time non-convertible debenture (NCD) is issued by a microfinance institution to an insurance company.

The commercial paper is in accordance with RBI’s Non-Banking Companies Directions 1989 and in line with stipulations of the Fixed Income Money Market and Derivatives Association of India (FIMMDA), an association of commercial banks, financial institutions and primary dealers, the company said in a release.

Most of the major MFIs, including SKS, Spandana and Basix, in an attempt to expand the funding options have conducted a series of fund-raising exercises through rated pool assignment.

SKS Microfinance has served 53 lakh members across 19 Indian states and has a loan outstanding of Rs 28,011.08 million, with a 99.1% repayment rate as of September last year.


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