The country’s only listed micro-finance company SKS Microfinance today said that it will raise the investment limit for foreign institutional investors in the company to 74 per cent from 24 per cent at present.
Following the announcement, shares of cash-strapped SKS surged 5 per cent to hit the upper circuit in the afternoon trade on the BSE at Rs 98.35 apiece.
“Shareholders at the extraordinary general meeting (approved) to increase the investment limit of FIIs from 24 per cent to 74 per cent of the company’s paid-up equity capital,” SKS said in a filing to the BSE.
Earlier this month, the company had said that it would raise up to Rs 500 crore through the sale of shares to institutional investors.
In July 2010, SKS pushed the micro-finance sector into public limelight after the company mopped up over Rs 1,650 crore (around $350 million) through its initial share sale.
Last month, its Founder and Executive Chairman, Mr Vikram Akula, resigned from the board, reportedly due to differences with other board members on management-related issues.
The resignation came close on the heels of the announcement of the second quarter results of SKS, which suffered a huge loss of Rs 384 crore during the period under review against Rs 80.54-crore profit in the corresponding period a year ago.
Micro-finance — the practice of giving small loans to poor people — had come under intense scrutiny after a string of farmers’ suicides in Andhra Pradesh, leading to the creation of an Act in the state to regulate their activities.
With collections dipping and defaults rising, the MFIs are now finding it hard to raise resources from banks.