Chennai-based non-banking financial company Five Star Business Finance has filed papers with the Securities and Exchange Board of India (Sebi) to raise up to Rs 2,752 crore through an initial public offering (IPO).
The IPO is a complete offer for sale of shares worth Rs 257.10 crore by SCI Investments V, Rs 568.92 crore by Matrix Partners India Investment Holdings II, Rs 9.56 crore by Matrix Partners India Investments II Extension, Rs 385.65 crore by Norwest Venture Partners X – Mauritius, Rs 1,349.78 crore by TPG Asia VII SF and Rs 180.93 crore by a part of the promoter group, according to the draft red herring prospectus filed with Sebi.
At present, TPG Asia VII SF holds a stake of 20.99%, Matrix Partners India Investments Holdings II 14.09%, individual promoters Lakshmipathy Deenadayalan, Hema Lakshmipathy and Shritha Lakshmipathy a combined at 20.26%, and Norwest Venture Partners X – Mauritius 13.01% and 10.22%, respectively, in the company. The company will not receive any proceeds from the offer.
Five Star Business Finance, provides secured business loans to micro-entrepreneurs and self-employed individuals, who are largely excluded by traditional financing institutions. It has a strong presence in south India. All loans are secured by the borrowers’ property, predominantly being self-occupied residential property.
The company has grown from 173 branches in 2019 to 268 branches as of September 30, 2021, across 126 districts in eight states and one Union territory. Its AUM grew at 86% CAGR over fiscal 2016-21, and it has had the fastest AUM growth among a subset of large peers with over Rs 3,000 crore of AUM. Live accounts grew from 15,803 in fiscal 2017 to 1,92,270 as of September 30, 2021. It has a business and collections team of 2,827 employees, including 2,258 relationship officers.
ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services and Nomura Financial Advisory and Securities (India) are the book running lead managers to the issue.