Sequoia invests $11.5 million in micro-finance fund

Sequoia invests $11.5 million in micro-finance fund

Sequoia Capital India, a leading private equity fund, has invested $11.5 million (Rs.51 million) in SKS Microfinance for providing financial services to five million poor families by 2010.

The venture fund had decided to invest in an enterprise like SKS that not only makes economic sense but also helps empower the people, Sequoia managing director Sumir Chaddha said in a statement here Thursday.

“SKS works on three inter-linked principles to scale micro-finance, with a strong social mission to ensure its members hold a significant stake and benefit from profits it earns. The principles are a for-profit methodology to access capital, using best practices for speedy growth and deploying technology to minimise high delivery costs,” Chaddha noted.

As one of the leading micro-finance institutions, SKS has benefited about 600,000 women borrowers in 7,200 villages across 11 states with its timely credit facility. In the 2006-07 fiscal, it has disbursed about Rs.7 billion to the needy, with around 99 percent on-time repayment rate.

With 260 branches spread over Andhra Pradesh, Bihar, Chhattisgarh, Karnataka, Jharkhand, Maharashtra, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal, the institution offered life insurance to 1.2 million customers and piloted health insurance for the poor and urban slum-dwellers through its NGO affiliate.

“We have created a model to attract a global private equity firm like Sequoia to channel its funds to the poor and encourage more capital to come into micro-finance for enabling greater financial inclusion for the 400 million poor in the subcontinent,” SKS founder CEO Vikram Akula said in the statement.

Other investors in SKS are Unitus Equity Fund, Odysses Capital, SIDBI and entrepreneur and venture capitalist Vinod Khosla.

Sequoia Capital has a track-record of providing venture capital to emerging firms and has invested in Google, Yahoo!, and You Tube among others. Managing three funds totalling $750 million, its Indian subsidiary provides venture and growth equity capital to entrepreneurs across verticals.