alarm:clock

Venture Capital - Thursday, March 29, 2007

Sequoia Invests $11.5M in Micro-finance Fund

Sequoia is getting some nice TV coverage today on MSNBC's Closing Bell for its $11.5M investment in Indian Microfinance bank SKS. SKS says it is now one of the fastest growing Microfinance institutions in the world and the first for-profit microfinance lengder. The company says it grew by 160% with a 99% on-time repayment rate last year. SKS currently provides loans to its 600K members in 7,200 villages in rural India.

SKS says that the new capital will go towards giving loans to over 5M poor families by 2010. SKS estimates that its loans have a return on equity of 23%. In fact, 23% is the standard interest rate for its loans, which seems to us like loan sharking but we understand the poverty level folks that get these loans don't have many other options.

Sequoia's investment includes an exit clause. In the next three to five years, SKS will either have an initial public offering or be acquired.

Here's an interesting quote from another SKS investor: “Established markets never took poor people seriously. They neglected the obvious business opportunity. The larger banks and some of the larger institutions have not gone into this business systematically. This creates an opportunity for an entrepreneur like Vikram and a company like SKS.” Unitus Equity Fund, Chris Brookfield.

Read - Sequoia Invests $11.5 Million in Microfinance Fund (CNBC)