Five Star Business Finance Limited IPO Detail

Five Star Business Finance IPO open on November 9 and closes on November 11, 2022. They are planning to raise about ₹ 1,593.45 crore through this public issue.

In 1984, Five Star Business Finance Limited was established. It is an NBFC-ND-SI that offers secured business loans to self-employed people and microentrepreneurs, both of whom are largely shut out by conventional financial institutions. With a substantial presence in southern India, the company’s headquarters are in Chennai, Tamil Nadu.

To ensure that clients have the financial means to repay the loan after fulfilling their regular obligations and other event-related capital requirements, Five Star Business Finance Limited has developed a business model based on determining an adequate risk framework and the perfect instalment-to-income ratio.

As of September 30, 2021, they have a vast network of 268 branches distributed over eight Indian states and one union territory.

They have the fastest AUM growth among large peers (with more over ₹ 30,000 million in AUM), with a compound annual growth rate (“CAGR”) of 65.0%. (Financial Year 2017 to 2021)

Financial Highlights

Year	As at Sep. 30, 2021	FY 2021	FY 2020	FY 2019
Total Assets	6374.58	5793.61	4353.15	2361.17
Total Revenue	611.24	1051.26	787.35	408.99
Profit After Tax	217.55	358.99	261.95	156.41
Net worth	3453.31	2318.17	1944.58	1364.88

Five Star Business Finance IPO: Details

Issue Type	Book Built Issue IPO
IPO Price	₹ 450 to ₹ 474 per share
Face Value	₹ 1 per share
Market Lot	31 Shares
Issue size	33,617,061 shares of ₹ 1 (Aggregating up to ₹ 1,593.45 Crore)
Offer for sale	33,617,061 shares of ₹ 1 (Aggregating up to ₹ 1,593.45 Crore)
QIB Shares Offered	Not more than 50% of the Offer
NII (HNI) Shares Offered	Not less than 15% of the Offer
Retail Shares Offered	Not less than 35% of the Offer
Listing At	BSE, NSE
Promoters	1. Lakshmipathy Deenadayalan, 2. Hema Lakshmipathy, 3. Shritha Lakshmipathy, 4. Matrix Partners India Investment Holdings II, LLC and 5. SCI Investments V

Tentative Dates for Five Star Business Finance IPO

IPO opens on	Nov 9, 2022
IPO closes on	Nov 11, 2022
Basis of Allotment publication date	Nov 16, 2022
Initiation of Refund	Nov 17, 2022
Credit of shares to Demat Account	Nov 18, 2022
IPO listing	Nov 21, 2022

Five Star Business Finance IPO: Promoters Holdings

Pre Issue Share Holding	44.16%
Post Issue Share Holding	–

Five Star Business Finance Limited IPO: SWOT Analysis

STRENGTH

1. Fastest AUM growth among businesses with AUM of more than 30,000 million dollars, outstanding return and growth indicators, and a sizable potential addressable market; (CRISIL Report)
2. Excellent asset quality due to its capacity to maintain a strong on-ground collections infrastructure;
3. 100% internal sourcing, thorough credit analysis, and a solid framework for managing risk and collecting debts result in high asset quality;
4. Experienced, cycle-tested leadership, a seasoned, longtime promoter, a qualified management team, and backing from prestigious investors.

WEAKNESS

1. Small business with little ability to grow operations.
2. The states of Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka are where operations are predominantly concentrated.
3. The company’s operations, financial situation, and ability to recover the full value of collateral or amounts owed under defaulted loans in a timely or complete manner could all suffer.
4. Organisation embroiled in various litigation and other processes. Any unfavourable conclusion in such procedures could have a negative impact on the operations, financial situation, and business of the company.

OPPORTUNITY

1. The structural improvements will enhance the chances for rural businesses, present business opportunities for the banking and financial services industry, and support the economy’s long-term growth when combined with a favourable macroeconomic climate.
2. The segment for small business loans has experienced rapid growth, with a CAGR of 29% over the four years from fiscal 2017 to 2021. However, there are significant differences between states and even within different districts within the same state, which suggests a latent opportunity for providing loans to unmet or underserved customers.

THREADS

1. First-time borrowers make up a sizable share of the company’s clientele, which raises the risk of non-payment or default.
2. Variations in the market value of a firm’s investments could have a negative impact on the operations & financial health of the organisation.
3. Customers who choose to transfer their balances to other banks or financial institutions subject the company to dangers that may occur.

Miscellaneous Information

Download Prospectus	IPO DRHP
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/
IPO Registrar	KFin Technologies Private Limited Tel: +91 40 6716 2222 Investor grievance e-mail: einward.ris@kfintech.com Website: www.kfintech.com
IPO Lead Managers	1. ICICI Securities Limited 2. Edelweiss Financial Services Limited 3. Kotak Mahindra Capital Company Limited 4. Nomura Financial Advisory and Securities (India) Private Limited

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