The NBFC, backed by TPG Capital, Sequoia, Matrix Partners, Norwest Venture, KKR, and TVS Capital, is looking at a valuation of more than $ 3 billion, said one of the people quoted above.
In March 2021, Five Star Business raised around $ 234 million (Rs 1,700 crore) from its new and existing set of investors.
The company has a strong presence in South India. It provides secured business loans of around Rs 2 lakhs to Rs 10 lakhs against the security of self-occupied residential property to micro-entrepreneurs.
ICICI Securities, Kotak Mahindra Capital, Edelweiss, and Nomura Financial Advisory have been appointed as book-running lead managers to the issue.
Promoters held a 21.05 per cent stake in the company as of September 30, 2021, while TPG, Sequoia, and Matrix Partners owned 21.06 per cent, 18.47 per cent and 14.37 per cent stakes respectively. Norwest Venture Partners and KKR held 10.25 per cent and 6.06 per cent respectively.
The company has had a strong run from 103 branches in 2017 to nearly 260 plus branches as of date across 120 districts in 8 states.
Its consolidated portfolio expanded at a CAGR of 81 per cent during FY2016-FY2020, while it grew at a moderate pace of 14 per cent in FY2021 due to the impact of the Covid-19 pandemic. The 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 a 34 per cent growth in revenues at Rs 1051 crore in FY21, while its net profit jumped 37 per cent to Rs 359 crore.
According to ICRA, the company is expected to increase its asset under management at a compounded annual growth rate of 45-50 per cent between 2022-2024. The company saw its borrower base growing to more than 1.75 lakhs in FY21 with a disbursal of Rs 1,250 crore.
Target customers of Five Star Business Finance are mostly everyday cash and carry businesses such as small shop owners, flower vendors, maids, masons, among others who use the loans either for business purposes or for asset creation like home improvement and repairs or significant economic events in the family like marriage, education requirements.
