Five Star Business Finance, supported by TPG, Sequoia, and KKR, has filed draught documents for an initial public offering (IPO) to raise Rs 2,752 crore

Five Star Business Finance (FSBFL), a non-banking financial company, has filed preliminary draught documents with capital markets regulator Sebi for an initial public offering.

The company hopes to raise Rs 2,751.95 crore by selling shares to a group of high-profile investors.

SCI Investments V would sell Rs 257.10 crore worth of stock. The shares of Matrix Partners India Investment Holdings II and Matrix Partners India Investment Holdings II Extension would be sold for Rs 568.92 crore and Rs 9.56 crore, respectively.

Norwest Venture Partners X – Mauritius, for example, will sell Rs 385.65 crore worth of shares, while TPG Asia VII SF Pte Ltd will sell Rs 1,349.78 crore worth of shares, and Deenadayalan Rangasamy and Varalakshmi Deenadayalan, both members of the promoter group, will sell Rs 180.93 crore worth of shares via offer for sale (OFS).

Because the offer is entirely an OFS, the corporation will not get any money. Investors own the remaining 44.31 percent of the corporation, while promoters and promoter groups possess 44.31 percent.

TPG Asia VII SF Pte Ltd is the company’s main stakeholder, with a 20.99 percent ownership. Matrix Partners India Investments Holdings II, LLC (14.09 percent), promoter Lakshmipathy Deenadayalan (13.01 percent), and Norwest Venture Partners X – Mauritius are the other major shareholders (10.22 percent).

SCI Investments V owns 8.83 percent of the company, while Hema Lakshmipathy owns 7.18 percent, Sirius II Pte Ltd owns 6.04 percent, SCI Growth Investments III owns 3.49 percent, and Sequoia Capital Global Growth Fund III – Endurance Partners LP owns 3.49 percent.

The company will not be compensated in any way as a result of the offer.

Five Star Business Finance, a Chennai-based NBFC, providing secured business loans to micro-entrepreneurs and self-employed persons. It has a substantial presence in south India, and all loans are backed by the borrowers’ assets, which are mostly self-occupied residential properties (SORP).

V K Ranganathan founded the company in 1984 and began operations with a focus on consumer loans and automobile financing. In 2005, D Lakshmipathy shifted his company strategy to focus on small business loan financing in urban, semi-urban, and rural areas with growth potential.

In the six months ended September 2021 and FY21, over 95% of the company’s loan portfolio consisted of loans ranging in principle amount from Rs 1 lakh to Rs 10 lakh, with an average ticket size of Rs 2.7 lakh and Rs 2.6 lakh, respectively.

As of September 2021, it has Rs 4,639.29 crore in assets under management (AUM), up from Rs 4,445.38 crore in March 2021. Between FY16 and FY21, the AUM increased at an annual rate of 86 percent.

Five Star expanded from 173 branches in 2019 to 268 branches in September 2021, including 126 districts in eight states and one union territory.

 

The issue’s book running lead managers are ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services, and Nomura Financial Advisory and Securities (India).