Non-banking lender Five Star Business Finance on Friday said it has fixed a price band of ₹450-474 per equity shares for its ₹1,960-crore initial public offering (IPO).
The three-day initial share-sale of the Chennai-headquartered non-banking financial company (NBFC) will be open for public subscription during November 9-11. The bidding for anchor investors will open on November 7, according to the company's statement.
The IPO is entirely an offer for sale (OFS) of shares to the tune of ₹1,960 crore by existing shareholders and promoter group entities.
The NBFC is backed by investors like TPG, Matrix Partners, Norwest Ventures, Sequoia and KKR.
The OFS will see the sale of shares to the tune of ₹166.74 crore by SCI Investments V, ₹719.41 crore by Matrix Partners India Investment Holdings II LLC, ₹12.08 crore by Matrix Partners India Investments II Extension LLC, ₹361.44 crore by Norwest Venture Partners X- Mauritius and ₹700.31 crore by TPG Asia VII SF Pte Ltd.
At present, TPG Asia holds a 21.45 per cent stake, Matrix Partners owns 12.67 per cent, Norwest Venture has a 10.17 per cent stake and SCI Investments holds an 8.79 per cent stake in the company.
Investors can bid for a minimum of 31 equity shares and in multiples thereafter.
ICICI Securities, Kotak Mahindra Capital Company, Edelweiss Financial Services and Nomura Financial Advisory and Securities (India) Private Limited are the book-running lead managers to the issue.
Five Star Business Finance provides secured business loans to micro-entrepreneurs and self-employed individuals, the two segments of borrowers largely excluded by traditional financing institutions.
It has strong presence in south India, and all loans are secured by the borrowers' property, predominantly being self-occupied residential properties.
The NBFC commenced operations in 1984 with a focus on consumer loans and vehicle finance. It changed its business approach in 2005 towards small business loan lending in urban, semi-urban markets and rural areas with growth potential.
As of June 2022, Tamil Nadu, Andhra Pradesh, Telangana and Karnataka accounted for 85 per cent of the overall portfolio. Also, it has a network of 311 branches in 150 districts, 8 states and 1 Union Territory.
With a work force of 6,077 employees, its live accounts grew from 33,157 in FY18 to 2.3 lakh as of June this year.
The lender posted a 19.49 per cent growth in total income at ₹1,256.16 crore in FY22 from ₹1,051.25 crore in FY21, while its net profit rose to ₹453.54 crore from ₹358.99 crore during the period.
Asset Under Management increased to ₹5,100 crore as of March 31, 2022, compared to ₹4,400 crore a year earlier.
Five star Business Finance competes with Shriram City Union Finance, Veritas Financial and Management Services, Aye Finance, AU Small Finance Bank, Aavas Financiers, and Home First Finance Company India, among others.