Bajaj Allianz picks 2.5% stake in SKS Microfin

Bajaj (BAJAJAUTO.NS : 2101.05 0) Allianz, one of India's leading insurer offering general and life insurance products, has announced a strategic investment of Rs 50 crore ($10 million) in SKS Microfinance. The equity deal claimed to be the first-ever investment by an insurance company in an Indian microfinance institution (MFI) signals an important step in the evolution of SKS Microfinance.

While the company officials were tightlipped over the exact stake acquisition by Bajaj Allianz, market sources said that it will be around 2.5% stake and the deal took place a month back. SKS Microfinance raised over Rs 700 crore till date from leading domestic and international equity players.

Announcing this milestone, SKS Microfinance founder and chairman Vikram Akula said, "An investment in SKS Microfinance by a mainstream investor such as Bajaj Allianz is a vote of confidence in the company and in microfinance. Investment from a leading private insurer gives SKS greater stability and credibility, as well as a stronger capital base to extend our reach to serve more poor customers."

SKS Microfinance and Bajaj Allianz Life Insurance partnered in April 2008 to launch India's first micro-insurance product for the rural poor.

With this investment, SKS Microfinance will further improve its capital adequacy ratio (CAR) requirements.