Microfinance is getting attention of private equity players

SKS Microfinance Receives $2.5 Million Investment From Vinod Khosla, Others


This is the biggest ever investment in an Indian microfinance institution. Top Silicon Valley venture capitalist Vinod Khosla, Small Industries Development Bank of India (Sidbi) and others have invested Rs 11 crore ($2.5 million) in SKS Microfinance. Khosla has contributed Rs 2.1 crore (for 12.83 per cent stake). Khosla, one of the founders of Sun Microsystems and a VC with Kleiner Perkins, is these days focusing on microfinance and other ventures like ethanol. Hyderabad-based SKS will use the money to access commercial debt and increase operations from its current base of 2,00,000 clients to 7,00,000 in 2006-07. SKS serves over 3,000 villages spread across five states - Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Orissa. It has a portfolio of $18 million and has achieved an annual growth rate of 250 per cent. Tech entrepreneurs Ravi Reddy and Sandeep Tungare, co-founders of Vistaar Technologies, have contributed a total of Rs 2.1 crore (12.83 per cent). Unitus Equity Fund (UEF) has also invested Rs 2.1 crore (12.83 per cent). UEF is managed by a subsidiary of Unitus, a Washington-based global microfinance institution. In addition, SKS borrowers have increased their investment from Rs 2 crore ($450,000) to Rs 6.5 crore ($1.5 million) and Sidbi has raised its contribution from Rs 50 lakh ($112,000) to Rs 1 crore ($225,000). SKS borrowers now have a stake of around 40 per cent in the institution and Sidbi has 6.11 per cent stake. SKS employees have approximately 15 per cent stake.