Vikram Akula, the poster boy of Indian microfinance, will soon be stepping down as CEO of SKS Microfinance. Vishwanath Pilla finds out what made Akula relinquish his position after bagging the largest private equity deal in the history of the microfinance sector.
Here is a transcript of Vishwanath Pilla’s comments on CNBC TV18. Also watch the accompanying video.
In a country where mainstream banking system still eludes the poor, Vikram Akula built a successful enterprise — SKS Microfinance — by making finance available to the poor. Today, SKS is the fastest-growing microfinance institution in the world. Recently it raised Rs 366 crore — the largest PE investment in the world. Sandstone capital led the investment which included Kismet Capital and SVB India Capital Partners, the existing investors of SKS Microfinance. However in the wake of the deal, Vikram Akula chose to hand over the mantle of the company to Suresh Gurumani from Barclays Bank. Akula will now remain as full-time director on board.
Akula says, “The reason for the change is to allow me to focus on new strategy initiative. We are primarily doing micro-credit and a little of insurance. The whole range of new financial services the poor need, they need insurance products, products for savings and also new technologies like mobile banking.”
This latest PE funding comes at a crucial juncture when most microfinance institutions in the country are facing credit crunch. Now it plans to increase its customer base to eight million in next two years from current 3.3 million existing customers. Though the company refused to disclose details about current equity structure, there are reports that Vikram Akula made a killing by offloading his stake in the company. However, Akula denies such reports.
He says, “The new equity we have received is a completely new public issue. I did not sell any of my shares nor did any of the other existing investors. As a result of this, no dilution has happened. Dilution of shares happened to the shares sold as part of the financing.”