Five Star Business Finance Ltd IPO to open on Nov 09, price band at Rs 450 to Rs 474 per equity share

The company has fixed the price band at Rs 450 to Rs 474 per Equity Share for its maiden public offer, the company said.

The IPO will open on Wednesday, November 09, 2022, for subscription and closes on Friday, November 11, 2022.

Investors can bid for a minimum of 31 Equity Shares and in multiples of 31 Equity Shares thereafter.

The offer is an Offer for Sale aggregating to Rs 1960 crore by the company's promoters and existing shareholders.

The offer for sale comprises Rs 166.74 crore by SCI Investments V, Rs 719.4crore by Matrix Partners

India Investment Holdings II LLC, Rs 12.08 crore by Matrix Partners India Investments II Extension LLC, Rs 361.4

crore by Norwest Venture Partners X – Mauritius, Rs 700.3 crore by TPG Asia VII SF Pte. Ltd.

The company said the IPO size has been reduced from Rs 2,250 crore to Rs 2,000 crore owing to the change in the economic scenario from November 2021, when the DRHP was filed and later.

Five Star Business Finance provides secured business loans to micro-entrepreneurs and self-employed individuals, each of whom is largely excluded by traditional financing institutions, the company officials said.

According to the company, it has a strong presence in south India, mainly in three states Tamil Nadu, Andhra Pradesh, and Telangana.

All loans are secured by the borrowers’ property, predominantly being self-occupied residential property (SORP), it said.

It is the fourth fastest AUM growth of 50% CAGR over fiscal 2018-22 among the compared peers.

Over 95% of its loan portfolio comprises loans from between Rs 0.1 million to Rs 1.0 million in principal amount, with an average ticket size of Rs 0.29 million, for the three months ended June 30, 2022.

Asset Under Management stood at Rs. 5100 crores as of March 31, 2022, compared to Rs. 4400 crores as of March 31, 2021.

As of June 30, 2022, Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana accounted for 85% of the overall portfolio.

Five Star Business has the second highest Capital Adequacy Ratio of 75.2% after Aptus Value Housing (85.6%) among the compared peers as of March 2022.

As of June 30, 2022, it has a network of 311 branches in 150 districts, 8 states and 1 union territory. With a work force of 6077 employees, live accounts grew from 33,157 in fiscal 2018 to 230,175 as of June 30, 2022.

In addition, it also has a business and collections team of 2,550 employees including 2,250 Relationship Officers.

Five Star Business Finance competes with Shriram City Union Finance Limited, Vistaar Financial Services Private Limited, Veritas Financial and Management Services Private Limited, Aye Finance, Lendingkart Technologies Private Limited, Digikredit Finance Pvt Ltd and AU Small Finance Bank, Aavas Financiers Limited, Home First Finance Company India and Aptus Value Housing Finance India.

The NBFC posted a 19.49% growth in total income at Rs 1256.16 crore in FY22 from Rs 1051.25 crore in FY21, while its net profit stood at Rs 453.54 crore in FY22 from Rs 358.99 crore in FY21.

Total income increased by 12.74% to 339.05 crore for the three months ended June 30, 2022 from Rs 300.75 crore for the three months ended June 30, 2021, primarily due to an increase in revenue from operations. Profit after tax increased by 37.28% to Rs 139.43 crore for the three months ended June 30, 2022 from Rs 101.57 crore for the three months ended June 30, 2021.

IIFL Securities Limited is the sole book-running lead manager and Link Intime India Private Limited is the registrar of the issue.