The Chennai-headquartered Non-banking financial company – Five Star Business Finance, which commenced operations in 1984, has filed preliminary papers with SEBI to raise up to Rs 2,752 crore through an initial public offering (IPO). The company provides secured business loans to micro-entrepreneurs and self-employed individuals, each of whom is largely excluded by traditional financing institutions. With this, Five Star Business Finance is looking at a valuation of more than $3 Billion.
The IPO is entirely an offer for sale (OFS) by existing shareholders and promoter group entities, according to the draft red herring prospectus (DRHP). The OFS will see the sale of shares of Rs 257.10 crore by SCI Investments V, Rs 568.92 crore by Matrix Partners India Investment Holdings II LLC, Rs 9.56 crore by Matrix Partners India Investments II Extension LLC, Rs 385.65 crore by Norwest Venture Partners X- Mauritius, Rs 1,349.78 crore by TPG Asia VII SF Pte Ltd and Rs 180.93 crore by promoter group entities.
At present, TPG Asia holds a 20.99 per cent stake, Matrix Partners owns over 14 per cent, Norwest Venture has a 10.22 per cent stake and SCI Investments holds an 8.83 per cent stake in the company.
ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services and Nomura Financial Advisory and Securities (India) Private Limited are the books running lead managers to the issue.
It has a strong presence in south India, and all loans are secured by the borrowers’ property, predominantly being self-occupied residential property. Five Star has grown from 173 branches in 2019 to 268 branches as of September 2021 across 126 districts in eight states and one union territory.
Its assets under management (AUM) grew 86 per cent CAGR over fiscal 2016-21. The asset base stood at Rs 4,445 crore as of March 2021, compared to Rs 3,892 crore as of March 2020.
The NBFC posted a 34 per cent growth in total income at Rs 1,051 crore in FY21 from Rs 787 crore in FY20, while its Net Profit jumped 37 per cent to Rs 359 crore in FY21 from Rs 262 crore in FY20. It also recorded a Profit After Tax (PAT) of Rs 218 crore for the first half of the current financial year.
(Source- PTI News)
