Five Star Business Finance LTD IPO: GMP,Issue Price, Issue Size

The initial public offering (IPO) of Five Star Business Finance Ltd(NBFC), a non-banking financial company (NBFC) supported by Sequoia Capital and KKR, is scheduled for October 19, 2022. 

Using the public listing, the small business lender with its headquarters in Chennai hopes to raise $400 million (more than Rs 2,900 crore), according to two people with knowledge of the situation who spoke on the condition of anonymity. 

Five Star Business Finance Ltd IPO – Overview  

Five-Star Business Finance IPO Dates	19 – 21 October 2022
Five-Star Business Finance IPO Price
Five-Star Business Finance IPO Face Value	₹1 per share
Issue Size	shares of ₹1  (Aggregating up to ₹2,751.95 Cr)
Offer for Sale	shares of ₹1  (Aggregating up to ₹2,751.95 Cr)
Issue Type	Book Built Issue IPO
Listing At	BSE, NSE
QIB Shares Offered	Not more than 50% of the Offer
NII (HNI) Shares Offered	Not less than 15% of the Offer
Retail Shares Offered	Not less than 35% of the Offer
Company Promoters	Lakshmipathy Deenadayalan, Hema Lakshmipathy, Shritha Lakshmipathy, Matrix Partners India Investment Holdings II, LLC and SCI Investments V are the company promoters.

Five Star Business Finance Ltd–Industry Overview 

CRISIL Research expects India’s GDP to increase at a rate of 6.0–7.0% annually between fiscal years 2023 and 2025 after making a comeback in fiscal 2022. The following elements will help this growth: 

• Push for investments rather than consumption to increase the economy’s potential for production. 

• The production linked incentive (PLI) programme, which gives producers in specific industries volume-related incentives in an effort to promote local manufacturing. 

A continuous increase in consumption demand will result from the government’s raft of reform initiatives and the more expansionary stance of monetary policy. Policies aimed at further formalising the economy will inevitably speed up per capita income growth. 

To address the issue of credit risk perception on mid and small size non-banks, the government announced a 450 billion partial guarantee plan (for NBFCs) and a 300 billion special liquidity programme for NBFCs, housing finance companies (HFCs), and MFIs. 

Five Star Business Finance Ltd–Company Overview 

In order to ensure that customers have the resources to repay the loan after meeting their regular obligations and other event-based capital requirements, five-star business ltd developed a business model that is based on determining the appropriate risk framework and the optimal instalment to income ratio. As of September 30, 2021, March 31, 2021, March 31, 2020, and March 31, 2019, Five Star Business Finance ltd. primarily offered customers small loans for business purposes, which accounted for 29, 099.02 million (62.72% of our AUM), 27, 934.5 million (62.84% of our AUM), 24, 477 million (62.89% of our AUM), and 13,011.67 million (61.58% of our AUM; as well as loans for asset creation, such as home renovation or improvement. 

Customers who fit these criteria are the focus of Five Star Business LTD:  

•urban and semi-urban areas as well as in rural markets in India, where CRISIL anticipates faster growth in bank credit activity as financial awareness increases; 

• One who typically derive income from “everyday” cash and carry businesses with a focus on services;  

• Household net cash-flows of approximately 25,000 to 40,000 per month;  

• Who can provide collateral (typically land and buildings of approximately 1.0 m); 

As of September 30, 2021, Five Star Business Finance LTD had a vast network of 268 branches spread across eight states, one union territory, and roughly 126 districts throughout India, with Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka serving as some of its important states. By September 30, 2021, these important states would make up about 85% of its branch network. Approximately 95% of its branches are situated in towns and cities with a population of up to one million as of September 30, 2021. 

As of September 30, 2021, the following table contains specific information about Five Star Business branch network by state and territory: 

Five Star Business LTD IPO – Proceeds 

The Company will not receive any proceeds from the Offer and all such proceeds will go to the Selling Shareholders. 

Five star Business Finance Ltd – Financial Statements 

Five Star Business Finance LTD –Strengths 

• Fastest AUM growth among its competitive peers. 
• Strong “on-ground” collections infrastructure. 
• Ability to successfully expand to new underpenetrated geographies through a calibrated expansion strategy. 

Five Star Business Finance LTD IPO – Weakness 

• The Coronavirus pandemic (COVID-19) has certain adverse effects on its business. 
• Require substantial capital for its business and any disruption in sources of capital could have an adverse effect on business, operations, and financial condition. 
• The risk of non-payment or default by the borrowers may adversely affect its business, operations, and financial condition. 

Five-Star Business Finance Offer Registrar

Kfin Technologies Private Limited
Selenium, Tower B,
Plot No- 31 and 32, Gachibowli, Financial District
Nanakramguda, Serilingampally
Hyderabad 500 032, Telangana
Phone : +91 40 6716 2222 / 1800 309 4001
E-mail: sbfl.ipo@kfintech.com
Website: www.kfintech.com

Five-Star Business Finance Limited Contact Details

Five-Star Business Finance Limited
New No. 27, Old No. 4,
Taylor’s Road, Kilpauk,
Chennai 600 010,
Tamil Nadu, India
Phone: +91 44 4610 6260
Email: cs@fivestargroup.in 
Website: www.fivestargroup.in

Five Star Business Finance IPO Lead Manager(s)

• ICICI Securities Limited (Past IPO Performance)
• Edelweiss Financial Services Ltd (Past IPO Performance)
• Kotak Mahindra Capital Company Limited (Past IPO Performance)
• Nomura Financial Advisory And Securities (India) Pvt Ltd (Past IPO Performance)