Five-Star Business Finance Ltd. IPO

Five-Star Business Finance Ltd.

IPO Listing Details

Listed On

BSE & NSE

Listed On

Issue Price

₹474

Issue Price

Listing Price

₹450

Listing Price

Listing Gains

-₹24.05 (-5.07%)

Listing Gains

IPO Details

Bidding Dates

09 Nov - 11 Nov '22

Bidding Dates

Min. Investment

₹13,950

Min. Investment

Lot Size

31.00

Lot Size

Price Range

₹450 - ₹474

Price Range

Issue Size

1,513 Cr

Issue Size

Subscription Rate

  • Retail Individual Investor
    0.11x
  • Non-Institutional Investor
    0.61x
  • Qualified Institutional Buyers
    1.77x
  • Employees


About Company

The initial public offering (IPO) of Five Star Business Finance Ltd will hit the street on November 9. Five Star Business Finance is an NBFC-ND-SI (non-banking finance company) that provides secured business loans to micro-entrepreneurs and self-employed individuals, each of whom is largely excluded by traditional financing institutions. Incorporated on May 7, 1984, Five Star Business Finance is backed by marquee institutional investors such as TPG Capital, Sequoia Capital, Matrix Partners, Norwest Venture Partners, KKR and TVS Capital Funds Ltd. The company has an extensive network of 311 branches as of June 30, 2022, spread across eight states and one union territory and approximately 150 districts across India, with Tamil Nadu, Andhra Pradesh, Telangana and Karnataka being the key states. It had an active loan base of 230,175 and 217,745 as of June 30, 2022, and March 31, 2021, respectively. The company’s growth is primarily volume-led through increasing its customer base while keeping the average ticket size (ATS) stable. The interest rates on their loans depend on the underlying tenor (which ranges from 2 to 7 years), with approximately 95% of the loans sanctioned being between the interest rate range of 24% to 26% and between the tenure range of 5 to 7 years. Five Star Business Finance IPO will open for subscription on November 9 and close on November 11. The price band for the issue is fixed at Rs 450 to Rs 474 per share. The south India-based lender has reduced its IPO size to Rs 1,960 crore from Rs 2,752 crore earlier planned. The issue is a pure offer for sale (OFS) of 4,13,51,266 equity shares aggregating up to Rs 1,960.01 crore. The proceeds from the offer and all such proceeds will go to the selling shareholders, and the company will not receive any amount.

Important Dates - Five Star Business Finance IPO

Application opens on 9th November 2022
Last date of application 11th November 2022
Date of Allotment 16th Novemberber 2022
Refund begins from 17th Novembber 2022
Credit of shares to Demat 18th November 2022
Listing date 21st November 2022

Why should you invest in Five-Star Business Finance Ltd. IPO?

Five Star Business Finance has shown decent growth in its financial performance over the years. With more than Rs 3,000 crore in assets under management (AUM), the company has the fastest AUM growth among peers. The company has developed a business model that is predicated on arriving at an appropriate risk framework, with the optimal instalment to income ratio to ensure that its customers have the necessary means to repay the loan after meeting their regular obligations and other event-based capital requirements.

 

Five Star Business Finance IPO

Five Star Business Finance has reported decent growth in its net profit and revenue over recent years. Check out its financial performance.

Financial Year Total Assets Total Revenues Net Profit
March 2020 Rs 4,353.15 crore Rs 787.35 crore Rs 261.95 crore
March 2021 Rs 5,793.61 crore Rs 1,051.26 crore Rs 358.99 crore
March 2022 Rs 6,343.07 crore Rs 1,256.17 crore Rs 453.54 crore


Five-Star Business Finance Ltd. IPO - SWOT Analysis

Strengths

Five Star Business Finance has the fastest Gross Term Loans growth among its compared peers with strong return and growth metrics and a significant potential addressable market. It has access to diversified and cost-effective long-term financing with a conservative approach to asset liability and liquidity management. The company’s strong on-ground collections infrastructure has led to its ability to maintain robust asset quality.

Weaknesses

The company operates in the small business finance industry, which is getting crowded and highly competitive. The company also gets affected by volatility in interest rates for both its lending and treasury operations, which could cause its net interest income and net interest margin to vary and consequently affect its profitability, result of operations and cash flows. It had negative net cash flows in the past and may continue to have negative cash flows in the future.

Opportunities

The company has demonstrated its ability to successfully expand to new underpenetrated geographies through a calibrated expansion strategy. Its experienced, cycle-tested leadership with an experienced longstanding promoter and a professional management team supported by marquee investors provide further growth opportunities.

Threats

Five Star Business Finance faces the risk of non-payment or default by its borrowers, which may adversely affect its business, results of operations and financial condition. The COVID-19 pandemic had certain adverse effects on the company’s business, operations, cash flows and financial condition, and the extent to which it, or the effect of outbreaks of any other severe communicable disease, may continue to do so in the future is uncertain and cannot be predicted.

 

Five Star Business Finance Ltd IPO Noteworthy Highlights

Take a glance at some of the key details and information about Five Star Business Finance IPO before investing:

- At present, TPG Asia VII SF Pte Ltd holds a 21.52% stake, Matrix Partners India Investment Holdings II LLC has a 12.5% stake, Norwest Venture Partners X Mauritius has 10.2% and SCI Investments V has an 8.81% stake in the company.

- Five Star Business Finance IPO lot size is 31 shares, and a retail-individual investor can apply for up to 13 lots, making the total investment of 403 shares or Rs 191,022.

- The joint Book Running Lead Managers (BRLMs) to this issue are ICICI Securities, Edelweiss Financial Services, Kotak Mahindra Capital and Nomura Financial Advisory and Securities (India).

- KFin Technologies Ltd. is the registrar to the issue.

- The company has reserved 50% of the offer for qualified institutional buyers (QIBs), 15% for non-institutional investors, and the balance 35% for retail investors.



How to apply for Five-Star Business Finance Ltd. IPO?

You can apply for the Five-Star Business Finance Ltd. IPO in these ways:

UPI
Link your personal bank A/C to a trusted UPI ID and map it with your TradeSmart account. Now, proceed further to book your IPO. On acceptance of the mandate, the bid amount will get blocked in your bank account Learn more.

Demat Account

1. If you are an Existing TradeSmart demat account holder and wish to apply for an Five-Star Business Finance Ltd. click here.
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Five-Star Business Finance Ltd. IPO FAQs

What are the opening and closing dates for Five Star Business Finance IPO?

Five Star Business Finance IPO will open for subscription on November 9 and close on November 11.

What is the price band for Five Star Business Finance IPO?

Five Star Business Finance IPO price band is Rs 450 to 474 per share.

What will be the post-issue implied market cap of the company?

The post-issue implied market cap will be Rs 13,111 – 13,811 crore.

Who is selling shares in the OFS?

Five Star Business Finance’s OFS comprises up to Rs 166.74 crore by SCI Investments V, up to Rs 719.41 crore by Matrix Partners India Investment Holdings II, LLC, up to Rs 12.09 crore by Matrix Partners India Investments II Extension LLC, up to Rs 361.45 crore by Norwest Venture Partners X Mauritius and up to Rs 700.32 crore by TPG Asia VII SF Pte Ltd.

What will be the promoter shareholding in Five Star Business Finance after the IPO?

The promoter shareholding in Five Star Business Finance after the IPO will reduce to 33.65% from 40.07%.

Who are Five Star Business Finance IPO Lead Managers?

ICICI Securities, Edelweiss Financial Services, Kotak Mahindra Capital and Nomura Financial Advisory and Securities (India) are the joint BRLMs for the issue.

Who is the registrar of the issue?

KFin Technologies Ltd is the registrar for Five Star Business Finance IPO.

What is Five Star Business Finance IPO Minimum and Maximum Lot Size?

The lot size for Five Star Business Finance IPO is 31 shares and in multiple thereof. A retail-individual investor can opt for up to 13 lots.

When will Five Star Business Finance IPO allotment take place?

The finalisation of the basis of allotment for Five Star Business Finance IPO will be done on November 16, and the allotted shares will be credited to investors’ demat accounts by November 18.

When and where will the Five Star Business Finance shares be listed?

Five Star Business Finance shares are proposed to be listed on November 21, 2022, on BSE and NSE.

 

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