The NBFC is looking at a valuation of more than $3 billion. Five Star Business Finance is backed by private equity players like TPG Capital, Sequoia, Matrix Partners, Norwest Venture, KKR, and TVS Capital.
According to the DRHP, the company will raise up to Rs 2,751.95 crore via a primary stake sale. The issue will entirely be an offer-for-sale (OFS), where its promoters and existing shareholders will offload stake.
Promoters and shareholders participating in the OFS include SCI Investments V, Matrix Partners India Investment Holdings, Norwest Ventures Partners X- Mauritius, TPG Asia VII SF PTE, Deendayalan Rangasamy and Varalakshmi Deendayalan among others.
In March 2021, Chennai-based Five Star Business had raised around $234 million (Rs 1,700 crore) from new and existing set of investors.
The company has a strong presence in southern states, primarily in Tamil Nadu. From 103 branches in 2017, the company has expanded to nearly 260 plus branches as of date across 120 districts in 8 states.
The company provides secured business loans of around Rs 2-10 lakh against the security of self-occupied residential property to micro-entrepreneurs.
Its consolidated portfolio expanded at a CAGR of 81 per cent during FY16-FY20, while it grew at a moderate pace of 14 per cent in FY2021 due to the impact of the Covid-19 pandemic.
FSBFL’s AUM stood at Rs 4,445 crore as of March 31, 2021, compared to Rs 3,892 crore as of March 31, 2020. The NBFC posted 34 per cent growth in revenues at Rs 1,051 crore in FY21, while its net profit jumped 37 per cent to Rs 359 crore.
The company has reserved 50 per cent of the issue for qualified institutional buyers, whereas non-institutional investors will have 10 per cent shares allocated to them. The remaining 35 per cent portion will be allocated to retail bidders.
The company has appointed ICICI Securities, Edelweiss Financial Services, Kotak Mahindra Capital Company and Nomura Financial Advisory and Securities (India) as the book running lead managers to the issue, whereas KFin Technologies is the registrar to the issue.