PE-backed Five Star Business Finance Gets Regulator Approval to Launch Rs 2,752 crore IPO

TPG, Matrix Partners and Five Star Business Finance Limited (FSBFL), backed by Norwest Ventures, received approval from the market regulator Securities and Exchange Board of India (Sebi) to launch its Initial Public Offering (IPO) of 2,752 crore of rupees.

The Chennai-headquartered NBFC had filed its draft red herring prospectus (DRHP) in November 2021. The issue includes the sale of secondary shares by existing investors including TPG Asia (worth of Rs 1,349.78 crore), Matrix Partners (worth Rs 578.48 crore), Norwest Venture (worth Rs 385.65 crore), Sequoia Capital India (worth Rs of Rs 257.1 crore) and promoters Deenadayalan Rangasamy and Varalakshmi Deenadayalan (valued at Rs 180.93 crore) as part of the Offer for Sale Package (OFS). The company will not receive any proceeds from the offer.

TPG Asia holds 20.99% of the capital, Matrix Partners 14.09%, Norwest Venture 10.22% and Sequoia Capital India, through four of its funds, holds a total of nearly 18% of the capital of the company.

The FSBFL was established by VK Ranganathan and started operating in 1984, focusing on consumer loans and auto finance. It provides secured business loans to micro-entrepreneurs and the self-employed, segments that have been largely excluded by traditional finance institutions.

As of March 2021, Five Star Business Finance, a small business lender, had raised $ 234 million (Rs 1,700 crore) from new and existing investors for a valuation of $ 1.4 billion (Rs 10,300 crore). Rs).

The funding round was led by Sequoia Capital India, with participation from TVS Capital and Norwest Venture Partners, as well as new investors led by KKR.

The assets under management of the non-bank lender (AUM) stood at Rs 4,445.38 crore at the end of March. In FY21, its net profit jumped 37% to around Rs 360 crore, from Rs 260 crore a year ago.

ICICI Securities Limited, Kotak Mahindra Capital Company Limited, Edelweiss Financial Services Limited and Nomura Financial Advisory and Securities (India) Private Limited are principally responsible for the issue.

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