Given my post yesterday about the benefits of profitability, a new article in the Wall Street Journal about the IPO of the largest microfinance institution in India is serendipitous. This isn’t that new of a story, though whenever microfinance makes it into the Wall Street Journal or the New York Time, you can guarantee that everyone in this industry will be talking about it. Hopefully I will be one of the first to offer my opinion.
There are a lot of case studies that highlight the “capitalism vs. altruism” schism in the microfinance today. After all, Compartamos in Mexico went public three years ago i topic I discussed at length one of my first posts on this blog – and there are dozens of private equity and venture capital firms focusing on the microfinance segment. But this one is unique in that the two central players – Vikram Akula, the CEO of SKS, and Muhammad Yunus, founder of Grameen Bank and godfather of microfinance – are closely related and, on this debate, stand diametrically opposed. Akula is a former disciple of Yunus, copying the Grameen model in SKS’ initial phases. It is not dissimilar to Aristotle and Plato, or Luke Skywalker and Darth Vader. My opinion on the matter has become a bit more formed over the last few months. I tend to side with Akula and SKS in their decision. First, some background on the path of the organization once Akula left Grameen Foundation to start SKS: