Five Star Business Finance Limited IPO Details

Five Star Business Finance Ltd IPO (Five Star Business Finance IPO) Detail

Five Star Business Finance - Company Overview

Five Star Business Finance Limited, founded in 1984, is an NBFC-ND-SI (Non-Banking Finance Company) that offers secured business loans to microentrepreneurs and self-employed individuals. As of June 30, 2022, the company had 311 branches spread across eight states, one union territory, and approximately 150 districts in India. Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka were crucial states.

Five Star Business Finance Limited developed a business model based on determining an appropriate risk framework and the optimal installment-to-income ratio to ensure that customers have the resources to repay the loan after meeting their regular obligations and other event-based capital requirements.

Business Overview

The company is headquartered in Chennai, Tamil Nadu, and has a significant presence throughout South India. We had a total of 4,306 employees as of September 30, 2021.

In total, the company has lent to over 185,000 customers. As of June 30, 2022, and March 31, 2022, they had an active loan base of 230,175 and 217,745, respectively.

With over 30,000 million in AUM, the company has the fastest AUM growth among its peers. Total Borrowings were Rs 25,203.19 million on June 30, 2022, and Rs 25,588.31 million on March 31, 2022.

Five Star Business Finance - IPO Synopsis

The IPO for Five Star Business Finance begins on November 9th and ends on November 11th. The offering consists of an Offer for Sale worth ₹1,960.01 crores.

The price band is set at ₹450-₹474 per share, with a lot size of 31 shares. The shares will be distributed on November 16th, and the issue will be listed on November 21st.

SCI Investments is selling shares worth ₹257.10 crores, Matrix Partners India Investments II Extension LLC is selling shares worth ₹568.92 crores, Norwest Venture Partners X- Mauritius is selling shares worth ₹385.65 crores, and TPG Asia VII SF Pte Ltd is selling shares worth ₹1,349.78 crores for the OFS. TPG Asia currently owns 20.99% of the company, Matrix Partners owns 14%, and Norwest owns 10.22%. ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services, and Nomura Financial Advisory and Securities Pvt Ltd are the book-running lead managers for this issue.

Five Star Business Finance - Objectives of the IPO

The Company will receive no proceeds from the Offer, and all proceeds will be distributed to the Selling Shareholders.

Five Star Business Finance - Financial Overview (in crore)

Five Star Business Finance IPO - Pros

1. Five Star Business Finance has the fastest AUM growth among its peers, with over ₹3,000 crores in AUM, as well as strong growth and returns.

2. One of the few institutions in the country that has developed an underwriting model that analyses the cash flows of small business owners and self-employed individuals in order to make loans to them.

3. The company's calculated approach allows it to expand into previously untapped geographical areas.

4. They have experienced and qualified promoters, as well as a highly professional management team backed by marquee investors.

Five Star Business Finance IPO - Cons

1. A significant amount of capital is required to run the business, and the company obtains it from various external sources; thus, the entire business is entirely dependent on the timely availability of these funds.

2. The main inherent risk is that the borrowers will not repay the loans, and the risk is higher in this case because the customer group is primarily middle- and lower-income, and there is a high likelihood of default among these small business owners and self-employed people.

3. To add to the preceding point, many of the borrowers are first-time borrowers, which increases the risk of default.

4. Interest rate volatility may have a negative impact on net interest income.

How to Apply for Five Star Business Finance Limited IPO

1. Go to https://ipo.adityatrading.in/

2. Enter your client ID

3. Enter the OTP received in your registered mobile number.

4. Choose the IPO and click on apply button.

5. Enter the UPI ID, Quantity, and Cut off price.

6. Click on submit button

7. Confirm the mandate the mandate request received on your phone by entering the UPI Pin.

8. You can also watch our youtube video on “How to Apply on IPO”