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Five Star Business Finance Limited is a non-banking finance company planning to raise Rs 1,960.01 crore through an initial public offering (IPO). The IPO comprises of only offer for sale of Rs 1,960.01 crore. The face value is set at Rs 1 per share.
The subscription for the IPO will be open from November 9 to November 11. The price band is fixed at Rs 450-474 per share.
Company Summary
Five Star Business Finance Limited is a NBFC providing secured business loans to micro-entrepreneurs and self-employed individuals, who are excluded by traditional financing institutions. The company is headquartered in Chennai, Tamil Nadu with a strong presence in south India and all of their loans are secured by our borrowers’ property, predominantly being self–occupied residential property.
The company has developed a business model that is predicated on arriving at an appropriate risk framework, with the optimal instalment to income ratio to ensure that our customers have the necessary means to repay the loan after meeting their regular obligations and other event-based capital requirements.
The company has an extensive network of 311 branches, as of June 30, 2022. The branches are spread across eight states and one union territory with Tamil Nadu, Andhra Pradesh, Telangana and Karnataka being their key states. The key states collectively account for approximately 85% of their branch network and approximately 95% of their branches are located in cities and towns with populations up to 10 lakh.
Over 95% of their loan portfolio comprises of loans between Rs 1 lakh to Rs 10 lakh in principal amount, with an average ticket size of Rs 2.7 lakh in the three months ended June 30, 2022. The company offers various loan products at different interest rates with approximately 95% of the loans sanctioned ranging between 24% and 26% and a tenure range of five to seven years.
Further, Five Star Business is backed by marquee institutional investors such as TPG Capital, Sequoia Capital, Matrix Partners, Norwest Venture Partners, KKR and TVS Capital Funds Limited.
Company Strengths
- Fastest AUM growth with more than Rs 3,000 crore in AUM, with strong return and growth metrics as well as a significant potential addressable market;
- The company has developed an underwriting model that evaluates the cash flows of small business owners and self-employed individuals in the absence of traditional document proofs of income.
- Strong on-ground collections infrastructure that results in robust asset quality.
- The company takes a calibrated expansion strategy to reach new under-penetrated geographies.
- The company has 100% in-house sourcing, comprehensive credit assessment and robust risk management and collections framework.
- Access to diversified and cost-effective long-term financing with a conservative approach to asset liability and liquidity management.
- Experienced leadership and management professionals.
Company Financials
|
Period |
3MFY23 |
FY22 |
FY21 |
FY20 |
|
Total Assets |
6,471.55 |
6,343.07 |
5,793.61 |
4,353.15 |
|
Total Revenue |
339.06 |
1,256.17 |
1,051.26 |
787.35 |
|
Profit After Tax |
139.43 |
453.54 |
358.99 |
261.95 |
|
Net Worth |
3,856.98 |
3,710.35 |
2,318.17 |
1,944.58 |
|
Total Borrowing |
2,520.32 |
2,558.83 |
3,425.20 |
2,363.69 |
|
Interest Income |
335.22 |
1203.77 |
1014.88 |
746.83 |
|
Net Interest Income |
247.3 |
828.96 |
639.09 |
479.17 |
|
Net Interest Margin |
19.17% |
17.68% |
16% |
16.69% |
*All numbers are in Rs crore except for percentages
Purpose of the IPO
The purpose of the IPO is to carry out the offer for sale to achieve the benefits of listing the company’s equity shares on the stock exchanges. The company will not receive any proceeds from the offer and all net proceeds will go to the selling shareholders.
Company Promoters
Lakshmipathy Deenadayalan, Hema Lakshmipathy, Shritha Lakshmipathy, Matrix Partners India Investment Holdings II and SCI Investments V are the promoters of the company.
IPO Details
| IPO Subscription Opening Date | November 9, 2022 |
| IPO Subscription Closing Date | November 11, 2022 |
| Face Value | Rs 1 per share |
| Price Band | Rs 450 to Rs 474 per share |
| Lot Size | 31 Shares |
| Issue Size | Rs 1,960.01 crore |
| Offer for Sale | Rs 1,960.01 crore |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
IPO Lot Size
Application | Lots | Shares | Amount |
Retail (Minimum) | 1 | 31 | Rs 14,694 |
Retail (Maximum) | 13 | 403 | Rs 1,91,022 |
Small HNI (Minimum) | 14 | 434 | Rs 2,05,716 |
Large HNI (Minimum) | 69 | 2,139 | Rs 10,13,886 |
Allotment Date
Timeline | Date |
Allotment of shares | November 16 |
Initiation of refunds | November 17 |
Credit of Shares to demat account | November 18 |
Listing date | November 21 |
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