Microfinance News Synopsis: SKS Microfinance IPO: Invest

Microfinance Focus, July 26, 2010: Microfinance News Synopsis brings a compilation of industry headlines broadcasted by other news media from across the world.

SKS Microfinance IPO: Invest: Investors with a high risk appetite can consider subscribing to the Initial Public Offer (IPO) of SKS Microfinance, one of the largest microfinance NBFCs in India. Presence in the under-penetrated micro-financing segment offers immense growth potential. The company has over 2,000 branches across 19 States, a more diversified presence than any other microfinance institution (MFI) in India and is better equipped to leverage future growth opportunities. Investors may consider this IPO at Rs 724 per share or below. At this price the company may realise Rs 1,260 crore from this IPO. At a price-book value of 3.5 times post-offer, the stock would trade at Rs 724. The PE ratio at this price would be 26 times. Over the last 15 months, the company has raised funds from private equity investors at Rs 300/share. SKS Microfinance has a high capital adequacy ratio (of 28.3 per cent which may further improve to excess of 40 per cent post-offer) and strong risk-management systems [Business Line]

A Micro presence: This is the story of Feizal, a resident of Uttar Pradesh. He sells aluminum pots, his son works as a tailor’s apprentice and his wife and daughters roll bidis. Between them, they earn about Rs 2,000 a month to feed a family of 10. Interestingly, despite the seemingly hand-to-mouth existence, they also manage to save for one daughter’s wedding. Once, when Feizal fractured his thigh bone, not only did he cough up almost two-thirds of the family’s income for treatment, but he was also rendered jobless for eight months. The illness ate into his savings and pushed him to borrow from friends and neighbours. But as the researchers of Portfolios of the Poor–How the World’s Poor Live on $2 a Day observed, “the family’s financial networth deteriorated, but did not turn negative”. Feizal comes across as the perfect target for a micro-insurance health product. Except, how easy will it be to convince him to pay small premiums to buy an insurance cover to guard him in case such misfortune strikes [Financial Express]

HNB support to micro finance sector reaches Rs 7 bln in past 20 years: Sri Lanka’s micro finance sector has been financed to the tune of Rs. 7 billion over the last two decades by the Hatton National Bank (HNB), creating over 100,000 micro finance entrepreneurs and in addition provided access to over 400,000 in micro finance savings, a top banker said this week. Chandula Abeywickrema Chairman, Banking With The Poor Network and a top HNB executive, said the HNB is the only commercial bank in the country to develop a sustainable micro finance strategy. He was speaking at a press conference where it was announced that The Banking With The Poor network will convene the Asia Micro Finance Forum 2010 organized by the foundation for development corporation. This will be sponsored by the Citi Foundation and HNB as the local host. The forum will be held in Colombo from October [Sunday Times]

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