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The ₹1,960.01-crore initial public offering of Five Star Business Finance Ltd saw a lukewarm response from investors on the opening day on Wednesday.
The NBFC’s IPO, which fixed price band at ₹450-474, will close on Friday. The market lot is 31 shares. The IPO was subscribed just 2 per cent so far. As against an offer for 3.04 crore shares, it received bids for 7.21 lakh shares.
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Unique business proposition justifies high valuations, but challenge in scaling the business likelyWhile the quota for qualifed institutional buyers and retail individual investors received 3 per cent each, non-institution portion got just 2 per cent.
Quota for investors
Half of the offer has been reserved for the qualified institutional buyers, 15 per cent for high-net-worth individuals, and the balance 35 per cent for the retail investors.
Five Star Business Finance is a prominent NBFC based in Chennai enjoying unicorn status with the presence of marquee investors such as TPG, Matrix Partners, Norwest Ventures, Sequoia and KKR
Five Star provides secured business loans, and 95 per cent of their loan disbursements are up to ₹10 lakh.
Anchor investors
Ahead of the issue on Monday, the NBFC has raised ₹588 crore from anchor investors.
The firm has decided to allocate 1.24 crore equity shares to anchor investors at ₹474 apiece, who included SmallCap World Fund, Fidelity Investments, Capital Research, Malabar Investments, Government Pension Fund Global, Abu Dhabi Investment Authority, Norges Bank, Carmignac Gestion, White Oak, Bay Capital, Segantii, SBI Life Insurance, HDFC Mutual Fund (MF), Baroda BNP MF, Edelweiss MF and Mirae MF.
Sellers
The entire issue is an offer for sale. 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.
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