SKS Microfinance

SKS Microfinance

Legatum was one of the first foreign commercial investors to identify the need to provide critical equity capital to for-profit microfinance institutions.

Learn more
SKS Microfinance

SKS Microfinance

Legatum was one of the first foreign commercial investors to identify the need to provide critical equity capital to for-profit microfinance institutions.

sks-money.jpg
sks-stats.jpg

A Catalytic Investment

An estimated 450 million people in India have no access to formal financial services and are forced to depend on the government or loan sharks to meet their financing needs. However, since 2007, the growth of for-profit Micro Finance Institutions (MFIs) has greatly improved access to finance for many and has enabled them to participate in the Indian economy.

Following a 2010 law banning private sector MFIs from operating in the state of Andhra Pradesh (AP), the MFI sector in India sustained heavy losses leading to the collapse of many operators. SKS Microfinance, the largest MFI in India at the time, had gone public just before the introduction of the law and was in need of capital in order to continue operating.

In July 2012, Legatum led a significant equity raising from SKS, which provided an opportunity for the company to survive and grow, but perhaps more importantly, was seen as a vote of confidence for the Indian microfinance sector as a whole. Legatum again led a further capital raising for SKS in May 2014. With confidence in the sector restored and the company once again on a solid financial footing, Legatum chose to exit the investment in late 2014, realising a 4x return on investment.

sks-image.jpg

SKS Microfinance's approach is to provide financial services to the doorstep of members in villages and urban regions. This provides convenience and savings to the poor in terms of cost and time associated with travelling to mainstream banks, but also enables SKS staff the ability to promptly collect repayments.

Investment Highlights

icon-unbanked.png

Banking the Unbanked

450 million people in India remain outside of the formal financial services sector, with for-profit MFIs representing the most scalable and sustainable way of providing access to financial services to the unbanked.

icon-growth.png

A small drop in the ocean

While SKS Microfinance is one of the largest MFIs in India, the company only currently serves 6.1 million customers, catering to a small fraction of the overall demand.

icon-experience.png

Prior sector experience

Legatum’s $25 million investment in SHARE Microfinance in 2007, at the time the largest single private investment in a for-profit MFI, laid the ground for our investment in SKS Microfinance.

sks-prosperity-rank.jpg