Five Star Business Finance is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI) that provides Small Business loans and Small Mortgage loans to eligible borrowers to meet their business and personal needs.
As of 30 September 2021, it had an extensive network of 268 branches spread across approximately 126 districts, eight states and one union territory. Approximately 85% of its branch network is in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka.
As of 30 September 2021, it had a total of 4,306 employees and is backed by marquee institutional investors such as TPG Capital, Sequoia Capital, Matrix Partners, Norwest Venture Partners, KKR and TVS Capital Funds Limited.
The company has provided loans to more than 185,000 customers in total. They had an active loan base of 176,467 as of March 31, 2021.
Five Star Business Finance IPO – Details
| IPO Opening Date | 09 November 2022 |
| IPO Closing Date | 11 November 2022 |
| Issue Type | Book Built Issue IPO |
| Issue Size | ₹1593.44 Crore |
| Face Value | ₹1 per equity share |
| IPO Price | ₹450 – ₹474 |
| Market Lot | 31 Shares |
| Min Order | 31 Shares (1 Lot) |
| Listing At | BSE, NSE |
| Register | KFin Technologies Limited |
| QIB Shares Offered | 50% |
| NII (HNI) Shares Offered | 15% |
| Retail Shares Offered | 35% |
Five Star Business Finance IPO – Date Schedule
| IPO Open Date | 09 November 2022 |
| IPO Close Date | 11 November 2022 |
| Basis of Allotment Date | 16 November 2022 |
| Initiation of Refunds | 17 November 2022 |
| Credit of Shares to Demat Account | 18 November 2022 |
| IPO Listing Date | 21 November 2022 |
Five Star Business Finance IPO – Lots Size & Price
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 31 | 14,694 |
| Retail (Max) | 13 | 403 | 1,91,022 |
Competitive Strengths
- Fastest AUM growth among our compared peers with more than ₹30,000 million in AUM, with strong return and growth metrics and a significant potential addressable market;
- Among the select institutions to develop an underwriting model that evaluates the cash-flows of small business owners and self-employed individuals in the absence of traditional documentary proofs of income;
- Strong on-ground collections infrastructure leading to our ability to maintain a robust asset quality;
- Ability to successfully expand to new underpenetrated geographies through a calibrated expansion strategy;
- 100% in-house sourcing, comprehensive credit assessment and robust risk management and collections framework, leading to good asset quality;
- Access to diversified and cost-effective long-term financing with a conservative approach to asset liability and liquidity management; and
- Experienced, cycle-tested leadership with an experienced longstanding promoter, and a professional management team and supported by marquee investors.
Company Promoters
- Lakshmipathy Deenadayalan
- Hema Lakshmipathy
- Shritha Lakshmipathy
- Matrix Partners India Investment Holdings II
- LLC and SCI Investments V
Company Financials
| Particulars | Total Revenue | Total Expense | Profit After Tax |
|---|---|---|---|
| 31 March 2019 | 408.98 | 190.88 | 156.41 |
| 31 March 2020 | 787.34 | 438.04 | 261.95 |
| 30 Sep 2020 | 504.47 | 253.74 | 189.13 |
| 31 March 2021 | 1051.25 | 574.81 | 358.99 |
| 30 June 2021 | 300.75 | 165.40 | 101.57 |
| 30 Sep 2021 | 611.23 | 322.83 | 217.54 |
| 31 March 2022 | 1256.16 | 651.96 | 453.54 |
| 30 June 2022 | 339.05 | 152.89 | 139.43 |
Object Of The Issue
- The Company will not receive any proceeds from the Offer and all such proceeds will go to the Selling Shareholders.
Five Star Business Finance IPO Strengths
- Five Star Business Finance has witnessed the fastest AUM growth among its peers, with more than Rs.3,000 crore in AUM and has also witnessed strong growth and returns.
- One of the few institutions in the country that has developed an underwriting model where the cash flows of small business owners and self employed individuals are analyzed in order to provide them with loans.
- The company has the ability to expand to un- penetrated geographical areas through its calculated approach.
- They have experienced and qualified promoters and a very professional management team with the backing of marquee investors.
Five Star Business Finance IPO Risks
- A substantial amount of capital is needed to run the business and the company derives it from various external sources and thus the whole business wholly depends on the timely availability of these funds.
- The main, inherent risk is of the borrowers not paying back the loans and the risk is higher in this case as the customer group is primarily the middle and lower income group and there is a high possibility of default among these small business owners and self employed people.
- Adding to the point above, a large part of the borrowers are first time borrowers which further increases the risk of default.
- The volatility in interest rates could adversely affect the Net interest income.
Five Star Business Finance IPO Peer Comparison
| S. No. | Face Value | Company Name | PE |
| 1 | 10 | Aavas Financiers Limited | 76.49 |
| 2 | 2 | Aptus Value Housing Finance Limited | 62.59 |
| 3 | 10 | AU Small Finance Bank Limited | 32.32 |
Five Star Business Finance IPO Promoter Holding
| Pre Issue Share Holding | 40.07% |
| Post Issue Share Holding | 33.65% |
Five Star Business Finance IPO Prospectus
- Five Star Business Finance IPO DRHP
- Five Star Business Finance IPO RHP
- Anchor Investors in Five Star Business Finance IPO
Company Contact Information
| Five Star Business Finance Ltd. New No. 27, Old No. 4, Taylor’s Road, Kilpauk, Chennai 600 010 Phone: +91 44 4610 6260 Email: cs@fivestargroup.in Website: https://fivestargroup.in/ |
Five Star Business Finance IPO Registrar
| KFin Technologies Limited Phone: 04067162222, 04079611000 Email: einward.ris@kfintech.com Website: https://karisma.kfintech.com/ |
Five Star Business Finance IPO Lead Manager(s)
| 1. ICICI Securities Limited 2. Edelweiss Financial Services Ltd 3. Kotak Mahindra Capital Company Limited 4. Nomura Financial Advisory And Securities (India) Pvt Ltd |
Five Star Business Finance IPO FAQs
| What is Five Star Business Finance IPO? Five Star Business Finance IPO is a main-board IPO. The issue is priced at ₹450 to ₹474 per equity share. The IPO is to be listed on BSE & NSE. |
| When Five Star Business Finance IPO will open? The IPO is to open on 09 November 2022 for QIB, NII, and Retail Investors. |
| What is Five Star Business Finance IPO Investors Portion? The investors’ portion for QIB – 50%, NII – 15%, and Retail – 35%. |
| How to Apply the Five Star Business Finance IPO? You can apply Five Star Business Finance IPO via ASBA online via your bank account. You can also apply for ASBA online via UPI through your stock brokers. You can also apply via your stock brokers by filling up the offline form. |
| How to Apply the Five Star Business Finance IPO through Angle One? Log in to Angle One Application with your credentials. Select the IPO. You will see the IPO Name “Five Star Business Finance”. Click on Bid Button. Confirm your Application. Now go to your UPI App on Net Banking or BHIM App to Approve the mandate. Open Demat Account with Angle One. |
| How to Apply the Five Star Business Finance IPO through 5 Paisa? Log in to 5 Paisa Application with your credentials. Select the IPO. You will see the IPO Name “Five Star Business Finance”. Click on Bid Button. Confirm your Application. Now go to your UPI App on Net Banking or BHIM App to Approve the mandate. Open Demat Account with 5 Paisa. |
| How to Apply the Five Star Business Finance IPO through Upstox? Log in to Upstox Application with your credentials. Select the IPO. You will see the IPO Name “Five Star Business Finance”. Click on Bid Button. Confirm your Application. Now go to your UPI App on Net Banking or BHIM App to Approve the mandate. Open Demat Account with Upstox. |
| How to Apply the Five Star Business Finance IPO through IIFL? Log in to IIFL Application with your credentials. Select the IPO. You will see the IPO Name “Five Star Business Finance”. Click on Bid Button. Confirm your Application. Now go to your UPI App on Net Banking or BHIM App to Approve the mandate. Open Demat Account with IIFL. |
| What is Five Star Business Finance IPO Size? Five Star Business Finance IPO size is ₹1593.44 Cr. |
| What is Five Star Business Finance IPO Price Band? Five Star Business Finance IPO Price Band is ₹450 to ₹474. |
| What is Five Star Business Finance IPO Minimum and Maximum Lot Size? The minimum bid is 31 Shares with ₹14,694 amount while the maximum bid is 403 shares with ₹1,91,022. |
| What is the Five Star Business Finance IPO Allotment Date? Five Star Business Finance IPO allotment date is 16 November 2022. |
| What is the Five Star Business Finance IPO Listing Date? Five Star Business Finance IPO listing date is 21 November 2022. The IPO is to list on BSE and NSE. |
