Chennai-based Five Star Business Finance (FSBFL) is planning to raise capital via an initial stake sale. The nonbanking finance company (NBFC) has filed its draft red herring prospectus (DRHP) with the capital markets regulator Sebi.
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.
The company will raise up to Rs 2,751.95 crore via its primary stake sale. The issue will entirely be an offer-for-sale (OFS), where its promoters and existing shareholders will offload stakes.
Promoters and shareholders participating in OFS include SCI Investments V, Matrix Partners India Investment Holdings, Matrix Partners India Investment II Extension, Norwest Ventures Partners X- Mauritius, TPG Asia VII SF PTE, Deendayalan Rangasamy, and Varalakshmi Deendayalan.
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 the Southern states of India, primarily in Tamil Nadu. It provides secured business loans of around Rs 2-10 lakhs against the security of self-occupied residential property to micro-entrepreneurs.
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 percent during FY16-FY20, while it grew at a moderate pace of 14 percent 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 percent growth in revenues at Rs 1051 crore in FY21, while its net profit jumped 37 percent to Rs 359 crore.
50 percent of the issue will be reserved for qualified institutional buyers, whereas non-institutional investors will have 10 percent shares allocated to them. The remaining 35 percent portion will be allocated to retail bidders.
The company has appointed ICICI Securities, Edelweiss Financial Services, Kotak Mahindra Capital Company, and Nomura Financial Advisory and Securities (India) as the book running lead managers to the issue, whereas KFin Technologies is the registrar to the issue.