Vikram Akula, founder of SKS Microfinance who quit the firm in late 2011 over differences with the firm’s board, is looking forward to get back at the helm of the company. He has already got the support of the SKS Trust, the single-largest shareholder of the firm which is backed by names like WestBridge Capital, Unitus and Sequoia Capital.
SKS Trust raised its holding to 12.6 per cent last week after acquiring shares in the open market and has nominated Akula as its representative on its board during the weekend.
Biksham Gujja, chairperson of the trustees of SKS Trust, wrote to SKS Microfinance that the trustee would like to help the company achieve its goal of promoting financial inclusion while also enhancing
long-term shareholder value. “In line with this, and as an initial step, the trustees have urged the board to induct Dr Vikram Akula, its nominee, immediately,” according to a letter.
SKS Trust Advisors Pvt Ltd is the sole trustee for five trusts and holds equity shares in the company on behalf of five SKS Mutual Benefit Trusts whose beneficiaries are the self-help group borrowers of SKS Microfinance.
The trust has nominated Akula, as he has ‘extensive experience in microfinance and is uniquely qualified to help the company’, according to Gujja. The proposal is expected to be taken up in the next annual general meeting that is yet to be announced.
Akula founded SKS Microfinance as a non-profit organisation in late 1997 and led it until 2004, when he joined McKinsey & Company in Chicago as a management consultant. In 2005, he returned to SKS when it was converted to a for-profit NBFC. He led the company as CEO till November 2008, and took the position of executive chairman after SKS appointed Suresh Gurmani as CEO (who was fired in October 2010).
He quit as executive chairman and CEO of SKS Microfinance in November 2011, following which SKS’ independent director PH Ravikumar was appointed as the interim non-executive chairman. Ravikumar continues to be the non-executive chairman with MR Rao currently at the helm of affairs as the CEO and managing director.
In an interview with Business Standard, Akula said he has accepted to lead the firm he founded and get its inclusion back as its primary agenda. He said he would separate his personal wealth from the goal of creating a private-sector model of microfinance. Last week Akula sold almost his entire stake by offloading 0.8 per cent holding for an estimated Rs 12 crore.
Akula stepped down from SKS Microfinance following huge losses suffered by the company and a tiff between the investors because of erosion in the value of their investments. The loss was attributed to a new law in its home state Andhra Pradesh putting severe restrictions on the operations of microfinance firms after complaints that they were adopting coercive loan recovery practices and charging exorbitant interest rates. The state was the biggest MFI market and especially critical for SKS Microfinance, the largest MFI in the country at that time.
“I could have been more careful about the type of investors I brought in. I could have been more careful about the type of senior management I brought in. Somewhere along the road, I lost the ability to control the philosophical direction of SKS,” said Akula in the Business Standard interview.
At the time he quit, Sequoia Capital, WestBridge, Unitus, Sandstone Capital among others were key institutional shareholders. Since then Sequoia Capital and Unitus in particular have sold a significant part of their holding. WestBridge which has also part exited some of its old investment, also put in more money into the firm last year.
Email queries sent to WestBridge and Unitus spokespersons on the development and their views on Akula’s proposed return to the firm, did not elicit any response till the time of publishing this article.
SKS has written off loans totalling Rs 1,362 crore and pared its staff in its home state to 1,200 from around 7,000 before the crisis. It has also come out of the red and has clocked net profit for the third consecutive quarter in the three months ended June 30, 2013 as a result of improvements in interest income and disbursements in states other than Andhra Pradesh.
Akula had reportedly launched a mobile banking venture after roping in some SKS Microfinance executives when he quit the microlender. It is not clear what happens to this venture if and when he returns to SKS Microfinance.
(Edited by Joby Puthuparampil Johnson)
