SKS Microfinance, India’s largest microfinance organization, is coming up with an IPO, which is expected to open for subscription from Wednesday, July 28, 2010. The IPO of the Hyderabad-based firm, will remain open for subscription from Friday, July 30, 2010
SKS Microfinance aims to empower the poor by providing them collateral-free loans for income-generation. SKS extends these loans to women who use it to scale up their enterprises and get themselves and their families out of poverty. Started in 1998 as an NGO, SKS transformed into an NBFC in 2005 and is regulated by the RBI
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Tuesday, July 13, 2010
SKS Micro Finance IPO opens from July 28, 2010
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# IPO in 2010
# IPO in July 2010
# SKS Micro Finance IPO
# SKS Micro IPO
# SKS Microfinance IPO
# Upcoming IPO
# Upcoming issues
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TEN REASONS WHY ONE SHOULD NOT INVEST IN SKS MICRO FINANCE IPO
ReplyDelete1. Unethical business: The Company is charging interest around 40% p.a. on money lent to the poor and down trodden.
2. Unsustainable business model: The business model will not sustain in the long -run.
3. No commitment from the promoters: SKS’s founder and chairman sold his shares to Tree Line Asia Master Fund (Singapore) Pte for $12.9 million in Feb. this year.
4. Look at the salary of top executives :
Suresh Gurumani - Managing Director of the Company. The total monthly salary is Rs. 12, 50,000. In addition to the above, Mr. Suresh Gurumani was paid onetime bonus of Rs. 10,000,000, in April 2009.
Dr. Vikram Akula - chairman Rs 70.00 lacs p.a. In addition, ESOP amounting to Rs10.97lacs, totaling Rs 1.79cr p.a.
5. Mohd. Yunus says - “I get very worried when investment funds come to microfinance,” said the founder of Bangladesh’s Grameen Bank, which pioneered the industry by giving small loans to rural women to start their own businesses. “I don’t want to excite businessmen that there is profit to be made here,”
6. The IPO will make the promoters, and other venture capitalists including some P/E funds that have stakes in these companies’ millionaires. The hapless borrowers continue to live in abject poverty.
7. Government /RBI will not be mute spectators to the exploitation.
They are bound to regulate the segment. This will make the business un- attractive.
8. Financial inclusion initiatives taken by the public sector banks will marginalize the micro finance business. Do not buy the theories put forth by the BRLMs to sell the issue.
9. The average cost of acquisition of shares by promoters is less than Rs50/-The Company has limited period of history and no dividend payment record.
10. The Andhra Pradesh government has constituted district level ‘Task Force Committees’ (TFCs) to investigate the unethical practices of micro finance institutions in the state. The committees were constituted after the government received many complaints against the loan shark practices adopted by some leading MFI’s of the state.