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August 23, 2010

SKS Microfinance: The Private Equity Story

Between March 2006 and Nov 2008, SKS Microfinance received investments of $111 million from Private Equity – the largest by any company in this sector. PE investors in the company (not including pre-IPO placements) include Unitus, Sequoia Capital India, SVB, Sandstone Capital, Vinod Khosla’s Khosla Ventures and Kismet Capital.

March-2006

Unitus and Vinod Khosla invest $0.5 million each for a total stake of 30.18%.

Company Valuation: $3.3 Million

March-2007

Sequoia Capital India, Unitus, Vinod Khosla and Odyssey Capital invest as part of a $12 million round. Shares are issued at Rs.49.77 per share. Of this, Sequoia invests $6.2 M for 20.38% stake, while Unitus and Vinod Khosla invested $1.5 million for 4.95% each; Odyssey Capital invests $1 million for 3.35%.

Company Valuation: $30.3 Million

January-2008

Sequoia Capital India, SVB, Unitus, Kismet Capital and Vinod Khosla invest $23 million for a 28.86% stake. Shares were issued at Rs.70.67 per share. Of this, Sequoia Capital India invests $11 million and Unitus invests $4 million.

Company Valuation: $79.7 Million

September - 2008

Sequoia invests $1.87 million for 1.5% by purchasing 818,069 shares from SKS founder Vikram Akula at Rs. 103.91 per share.

Company Valuation: $124.7 Million

November-2008

Sandstone Capital, Kismet Capital and SVB invest $75 million for 20.58% (upon conversion in Dec-09).

Issue of CCPS to Sandstone worth $40 million (6,256,344 Shares), Kismet Capital $17 million (2,655,131 Shares), SVB $1.5million (244,150 Shares) converted on December- 2009. Also allotment of equity shares to Sandstone for $13 million (2,085,448 Shares), Kismet Capital for $5.5 million (885,044 Shares), SVB for $0.5 million (81,383 Shares) at Rs 300 per share

Company Valuation: $364.4 Million

July -2009

Sequoia (along with SVB) a further $9.8 million for 3% stake by purchasing 2 million shares from Unitus at Rs 240 per share.

The IPO – August 2010

The company sells 16,791,579 shares, over half of which (9,346,256 shares) were sold by existing share holders) diluting 21.6% of the company. Shares are issued at Rs.985 per share

Company Valuation: $738 million

PE Investors who sold as part of IPO

Investor

Number of Share Sold

Amount Realized via IPO
(INR Crore)

Total Investment
(INR Crore)

Sequoia Capital India

3,989,703

392


125

Unitus

1,063,381

104

25

The Returns Each Investor Is Sitting On…

Investor

Value of Shares at IPO (INR Crore)

Investment

(INR Crore)

Return Multiple*

Sequoia Capital**

1,384

125

11.08 X

Sandstone

822

250

3.28 X

Vinod Khosla

417

14

28.86 X

Kismet Capital**

361

106

3.39 X

Unitus**

364

25

16.48 X

* At the time of the IPO and assuming they are able to sell at least at the IPO price.

** Part exited via IPO / prior to IPO

More information about this and other PE investments and exits are available as part of the Venture Intelligence Private Equity Deal Database, India's first and largest such database.

Visit http://www.ventureintelligence.in/pelogin.php to request a trial.