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Do IPOs work in the microfinance industry?

October 21, 2010 Leave a comment

There have been 2 significant multi-billion dollar IPOs within the microfinance industry in the last 2 years which has given us loads of food for thought. There was Compartmos which was worth $13billion and then most recently we had the SKS  which valued the relatively young microfinance institution at almost $1.5 billion  and was oversubscribed thirteen times! However, in the aftermath of the IPO, there have been huge pressures on the management team (as is expected in the private sector where the company has shareholders that need to be appeased!) after the flotation the CEO who led the IPO has since been sacked and there have been board room battles that have followed.  The question in most minds are: was SKS ready for the IPO? Are IPOs a good idea for microfinance institutions whose stated objectives are improving the livelihood of the poor though loans? definitely food for thought!

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