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First microfinance IPO turns employees into millionaires!
K Nirmala, 31, will prepay her home loan shortly, courtesy the stock she held in SKS Microfinance -- her employer for 13 years.
Nirmala, now a senior lead manager (training) in India's largest micro-finance institution, sold 1,500 shares for Rs 17.38 lakh (Rs 1.738 million).
She had received the shares in two tranches -- for Rs 10 and Rs 70 a share -- under the employee share purchase scheme (ESPS). She has another 1,750 shares that she intends to hold for the long term.
Nirmala is not alone. A week after the company was listed, many of her colleagues are finding themselves in the league of millionaires and are planning to use the money to invest in homes or their children's education.
There has been a flurry of activity from employees at the SKS counter, as the stock price has risen over 23 per cent to Rs 1,211 on the Bombay Stock Exchange.
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First microfinance IPO turns staff into millionaires!
Disclosures made to the exchanges show that over 50 employees sold part or entire holdings. And the data is only for transactions over Rs 5 lakh (Rs 500,000) in value, or sale/purchase of 5,000 shares.
A spokesperson for SKS Microfinance says: "We were an NGO, so there wasn't any way to reward employees via the ESPS route. In 2004, when we turned into an NBFC, we felt we should reward our employees."
In the first tranche, 20-30 employees, who had worked with the company for over 10 years, received shares at Rs 10 per share in 2007. Since then, the company has rewarded employees through the ESPS route. Stock options are given based on seniority.
Under the ESPS scheme, employees receive a specific number of shares after completing a certain number of years in the company. This March, shares were given to employees at Rs 636 a share. The vesting period is a minimum of one year.
The SKS bug has bitten employees at other micro-finance companies, too. Those who are planning to list include Spandana, Share Microfin and Asmitha Microfin.
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First microfinance IPO turns staff into millionaires!
According to reports, Spandana is in talks with investment bankers Morgan Stanley, Citigroup and JM Financial. And employees at these companies are already counting the days.
Vinod Jat, branch manager, Madhya Pradesh, at Spandana, says, "This is the best way to reward employees. You can't live on a salary of Rs 10,000-12,000 a month." He feels such windfalls help make this risky business fruitful.
SKS employees say the long wait was worth it. "There is high risk in the micro-finance business, as they have to carry cash to remote villages. Sometimes, we were attacked by thieves. As a result, many quit. Since the job has no fixed work hours, a lot of people don't remain in this profession for a long time," says Sarvendra Patel, a former employee of SKS Microfinance.
Patel, who works as branch manager, Aaadhar Microfinance, worked in the company for two years and quit five to six months ago.
A decision he obviously regrets now.
