Five Star Business Finance filed documents for IPO to generate up to Rs 2,752 crore

Five Star Business Finance Ltd, a non-banking financial firm, has filed a draught red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) to raise up to Rs 2,752 crore through an initial public offering (IPO).

TPG, Matrix Partners, Norwest Ventures, Sequoia Capital, and KKR are among the NBFC’s investors.

The IPO is a complete offer for sale (OFS) worth Rs 257.10 crore from SCI Investments V, Rs 568.92 crore from Matrix Partners India Investment Holdings II, LLC, Rs 9.56 crore from Matrix Partners India Investments II Extension, LLC, Rs 385.65 crore from Norwest Venture Partners X – Mauritius, Rs 1349.78 crore from TPG Asia VII SF Pte. Ltd, and Rs 180.93 crore from a member of the promoter group.

The firm will not be compensated in any way as a result of the transaction.

Five Star Business Finance, based in Chennai, offers secured business loans to micro-entrepreneurs and self-employed people. Among its rivals, the firm has had one of the quickest assets under management (AUM) growth rates.

As of March 31, 2021, the company’s AUM was Rs 4,445 crores, up from Rs 3,892 crores as of March 31, 2020.

Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana accounted for a large portion of the whole portfolio as of March 2021. Total income increased by 34% to Rs 1,051 crore in FY21 from Rs 787 crore in FY20, while net profit increased by 37% to Rs 359 crore in FY21 from Rs 262 crore in FY20.

For the first half of the current financial year, the firm had a profit after tax (PAT) of Rs 218 crore.