On November 9, NBFC Five Star Business Finance’s initial share sale for Rs 1,960 crore will open for public subscription.
The Chennai-based company’s three-day initial public offering (IPO) will end on November 11. On November 7, bidding for anchor investors will begin. According to the red herring prospectus (RHP), the IPO is entirely an offer for sale (OFS) of shares worth Rs 1,960 crore from existing shareholders and promoter group entities.Â
The NBFC Five Star Business Finance has backing from a variety of investors, including TPG, Matrix Partners, Norwest Ventures, Sequoia, and KKR.SCI Investments V will sell shares in the OFS for Rs 166.74 crore, Matrix Partners India Investment Holdings II LLC will sell shares for Rs 719.41 crore, and Matrix will sell shares for Rs 12.08 crore.
Partners India Investments II Extension LLC, Norwest Venture Partners X-Mauritius for Rs 361.44 crore, and TPG Asia VII SF Pte Ltd for Rs 700.31 crore. TPG Asia currently owns 21.45 percent of the company, while Matrix Partners owns 12.67 percent, Norwest Venture owns 10.17 percent, and SCI Investments owns 8.79 percent.
The issue’s book-running lead managers are Edelweiss Financial Services, Kotak Mahindra Capital Company, ICICI Securities, and Nomura Financial Advisory and Securities (India) Private Limited.
Micro- and self-employed individuals, who are typically overlooked by conventional financial institutions, are eligible for secured business loans from Five Star Business Finance. It has a significant presence in south India, and all loans are secured by the property of the borrowers, which is typically residential property used solely for personal use.
The NBFC began operations in 1984 with a focus on consumer loans and vehicle financing. In 2005, it changed its business strategy to focus on lending small businesses loans in rural, urban, and semi-urban markets with growth potential.
85% of the portfolio was owned by Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka as of June 2022.
Five Star now has 311 locations in eight states and one union territory, up from 252 locations in 2020. During that time, its live accounts increased from 1.43 lakh to 2.3 lakh. The NBFC’s total income increased from Rs 787 crore in FY20 to Rs 1,256 crore in FY22, and its profit increased from Rs 262 crore in FY20 to 453.5 crore in FY22.
Five Star Business Finance, a provider of mortgage loans for small businesses, is scheduled to launch its initial public offering (IPO) on November 9. The IPO is nothing more than an offer for sale (OFS), and shareholders will sell stakes worth 1,960 crore rupees. This IPO will allow for subscriptions until November 11. Nonetheless, prior to the IPO, the company will offer shares to anchor investors on November 7.
Promoters SCI Investments V and Matrix Partners India Investment Holdings II, LLC, are among the selling shareholders. They will sell stakes worth 166.74 crores and 719.41 crores, respectively, in the company.
Other investors include Matrix Partners India Investments II Extension, LLC, Norwest Venture Partners X – Mauritius, and TPG Asia VII SF, which will sell shares worth 700.32 crores and offer shares worth up to 12.09 crore.
Since the entire IPO is OFS, Five Star Business Finance will not use the proceeds of the issue; rather, they will be distributed to the aforementioned selling shareholders.
Micro- and self-employed people can get secured loans from Five Star for business purposes, asset creation (such as home improvement or renovation), and meeting costs associated with significant economic events (such as marriage, healthcare, and education).
The typical loan amount ranges from Rs. 1 lakh to Rs. 10 lakh for up to seven years. Monthly equal payments are required for the repayments.
