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PE-backed Five Star Business Finance gets nod for Rs 2,752 cr IPO
Photo Credit: VCCircle

TPG, Matrix Partners, and Norwest Ventures-backed Five Star Business Finance Limited (FSBFL) has received approval from market regulator Securities and Exchange Board of India (Sebi) to float its Rs 2,752 crore initial public offering (IPO).   

The Chennai-headquartered NBFC had filed its draft red herring prospectus (DRHP) in November 2021. The issue comprises secondary share sale by existing investors, including TPG Asia (worth Rs 1,349.78 crore), Matrix Partners (worth Rs 578.48 crore), Norwest Venture (worth Rs 385.65 crore), Sequoia Capital India (worth Rs 257.1 crore), and promoters Deenadayalan Rangasamy and Varalakshmi Deenadayalan (worth Rs 180.93 crore) as part of the entire offer-for-sale (OFS) offering. The company will not receive any proceeds from the offer.  

TPG Asia owns 20.99% stake, Matrix Partners owns 14.09% stake, Norwest Venture owns 10.22% stake, and Sequoia Capital India through four of its funds own an aggregate of close to 18% stake in the company.  

FSBFL was set up by V.K Ranganathan, and commenced operations in 1984, with a focus on consumer loans and vehicle finance. It provides secured business loans to micro-entrepreneurs and self-employed individuals, segments that have been largely excluded by traditional financing institutions.  

In March 2021, Five Star Business Finance, a lender to small businesses, had raised $234 million (Rs 1,700 crore) from new and existing investors at a valuation of $1.4 billion (Rs 10,300 crore). 

The funding round was led by Sequoia Capital India, with participation from TVS Capital and Norwest Venture Partners, as well as new investors led by KKR.  

The non-bank lender’s assets under management (AUM) stood at Rs 4,445.38 crore as on March end. In FY21, its net profit jumped 37% to around Rs 360 crore, from Rs 260 crore a year ago.  

ICICI Securities Limited, Kotak Mahindra Capital Company Limited, Edelweiss Financial Services Limited and Nomura Financial Advisory and Securities (India) Private Limited are the book running lead managers to the issue.

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